Is Purchasing Moderna Shares Worthwhile?
Moderna's share price took a tumble in 2024, dropping a whopping 58%, making it one of the worst performers in the S&P 500 index. Known for its groundbreaking work on messenger RNA (mRNA) vaccines, Moderna has been grappling with stagnant sales of its COVID-19 vaccine and sluggish market adoption of its new RSV shot. This downward spiral has continued into 2025, with shares dropping another 18% year to date. The company also slashed its full-year revenue guidance.
Despite the gloomy headlines, Moderna might be worth a second look. The biotech giant still boasts several compelling strengths, such as a robust pipeline of therapeutics in clinical trials, which could serve as a catalyst for a rebound.
Let's delve into the pros and cons of investing in Moderna stock.
Cons: Sluggish sales and revenue decline
Moderna gained international fame in late 2020 when it received the first emergency use authorization for its COVID-19 vaccine from the U.S. Food and Drug Administration (FDA). The breakthrough vaccine drove record sales and profits for the company through 2022.
However, sales projections for annual vaccination updates to bolster immunity to recurring changes in the coronavirus fell short. Public sentiment evolving, the emergence of competing therapeutics, and the withdrawal of emergency government funding for public immunization programs led to this unexpected shift.
From January to September 2024, Moderna's revenue dropped by 44% compared to the previous year, reaching $2.3 billion. This figure incorporates only $10 million in sales of the new RSV vaccine, highlighting the company's reliance on its COVID-19 shot, commercially known as Spikevax. Although Moderna has managed to trim costs and improve financial efficiency, the company incurred a year-to-date per-share loss of $6.37, a slight improvement compared to the $12.89 loss per share recorded in 2023.
Unfortunately, the financial blues haven't faded. At a recent investor conference, Moderna announced another setback, revising its 2025 sales forecast downward. The company now expects full-year revenue between $1.5 billion and $2.5 billion, marking a significant reduction from the previous forecast of $2.5 billion to $3.5 billion announced in September 2024. Analysts predict that the company will remain unprofitable for an extended period.
Pros: Vast clinical pipeline and promising partnerships
Moderna’s 2025 strategy encompasses maintaining its COVID-19 vaccine market share and progressing its late-stage candidate pipeline for respiratory vaccines. The company expects FDA approval for its RSV vaccine's expanded indication and has submitted an application for a combination influenza-COVID-19 vaccine, supported by impressive phase 3 study results.
Beyond respiratory vaccines, Moderna's diverse pipeline offers a wealth of opportunities, including potential treatments for norovirus and cytomegalovirus (CMV). The experimental mRNA-4157, developed in collaboration with Merck, holds promise across various cancerous tumor types. Moderna is targeting 10 product approvals within the next three years and aims for a compound annual growth rate (CAGR) for revenue exceeding 25% between 2026 and 2028. The company's robust balance sheet, with a last reported cash position of $9.2 billion, is well-equipped to support its objectives.
If you're confident in Moderna's ability to revive its fortunes, the present stock price could prove to be an attractive buying opportunity for a long-term investment.
Balancing the pros and cons
Moderna's position as a pioneer in mRNA technology makes it a compelling investment choice. However, sealing a second blockbuster drug is crucial for the company's sustainability.
Given Moderna's revenue decline and various uncertainties, convincing arguments for buying the stock are not abundant at this juncture. Investors might find more compelling opportunities elsewhere.
In light of Moderna's financial struggles, some investors might consider exploring alternative opportunities with more promising financial outlooks. However, Moderna's robust clinical pipeline and potential therapeutics, such as its RSV vaccine and partnerships with companies like Merck, offer promising prospects for future growth in investing. Despite the current challenges, the company's substantial cash position of $9.2 billion could provide it with the necessary resources to navigate through its tribulations.
