Thursday, Moderna Inc (NASDAQ:MRNA) unveiled key updates at its annual R&D Day by reducing annual R&D spending by $1.1 billion by 2027, enabling a focus on ten prioritized products.
The company expects R&D expenses to fall from $4.8 billion in 2024E to $3.6 billion—$3.8 billion in 2027.
The strategy, expanding its portfolio into oncology and rare diseases, positions Moderna to deliver ten product approvals within the next three years.
Oppenheimer downgraded Moderna stock from Outperform to Perform and removed the price target.
Oppenheimer analyst writes that with a restructured R&D budget, Moderna's non-respiratory assets will play a larger role in shaping the pipeline and face increased pressure to reach commercialization.
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RBC Capital Market decreased the price target from $90 to $75 while maintaining the Sector rating.
The analyst notes the COVID-19 vaccine maker pushed its breaking-even event by two years to 2028.
The analyst remains confident in Moderna's cancer vaccine and the potential of its broader platform over the long term. However, near-term challenges continue to be seen, such as declining COVID-19 vaccination rates and the gradual uptake of the respiratory syncytial virus (RSV) vaccine.
Needham's analyst highlights substantial commercial and competitive challenges in the respiratory vaccine market across all indications. Investors appear to view cytomegalovirus (CMV) as a less significant commercial opportunity, while the rare disease programs, including MMA and PA, are expected to have only modest peak sales potential, estimated at around $500 million.
The analyst says the INT Oncology program, developed in partnership with Merck & Co Inc (NYSE:MRK), offers the most upside potential. However, progress has been slow, and revenue from this program is unlikely to materialize before 2027 or later. Needham maintains the Hold rating.
William Blair notes that Moderna's pattern of issuing high financial expectations, followed by lowered guidance, has negatively impacted the company's stock.
Since cutting its 2024 revenue forecast during its second-quarter earnings 2024 call, the stock has dropped approximately 40%.
The analyst highlights that although Moderna has now pushed back its goal of breaking even to 2028, it will still need to double its revenue from the projected $3.0 billion-$3.5 billion in 2024 to $6.0 billion by 2028 to achieve breakeven along with reduced operating costs and streamlined COGS.
Piper Sandler reiterates the Overweight rating on Moderna but lowers the price target to $115 from $157.
Price Action: MRNA stock closed lower by 2.01% to $68.28 on Friday.
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