Moderna (MRNA) stock has fallen 71% over the last six months. While there’s still potential for near-term revenue tailwinds in the form of emerging infectious diseases, I’m concerned that the company may never deliver on its pipeline potential. One reason for this is the company’s extraordinary cash burn, and another is that these formative loss-making years may be negatively impacted by changing federal policy with a vaccine skeptic taking to the Department of Health and Human Services. As much as I like to take a positive opinion on Moderna, I’m bearish for now, as investing in it could be dead money.
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What’s Going On with Moderna’s Stock Price?
I can understand why many investors will see Moderna’s fallen share price as an opportunity. After all, there hasn’t been a great deal of change with regard to business performance in 2024 despite the huge fluctuations in the share price. Earlier this year, the stock surged due to renewed concerns about infectious diseases, particularly as new COVID-19 variants emerged, RSV cases increased, and experts became increasingly concerned about bird flu.
In fact, Moderna was given $176 million in July to work on a bird flu vaccine in case there is ever a human pandemic. The stock actually pushed above $160 as a result. That’s four times higher than the price at the time of writing. Nevertheless, there are good reasons for the stock’s downturn, including lower-than-expected vaccine sales, increased competition in the vaccine market, and concerns about the company’s ability to execute its sales and R&D strategies.
Moderna’s recent announcement of revised financial forecasts, including a two-year delay in reaching profitability and significant R&D cuts, further rattled investors who are now wondering whether they will ever see their investments grow. Moderna now faces challenges in rebuilding investor confidence and demonstrating its ability to diversify beyond COVID-19 vaccines. That could be increasingly challenging with possible changes to federal policy, which is why I have a negative outlook on the stock.
MAHA Could Pose Challenges for Moderna
The MAHA (Make America Healthy Again) movement also represents a potential threat to Moderna’s prospects. Vaccine stocks fell after Robert F. Kennedy Jr. was nominated by President-elect Trump to become the Secretary of Health and Human Services. That’s not entirely surprising given Kennedy’s stance on vaccines — among other things, he once claimed that “autism comes from vaccines.”
Following the announcement of his nomination, Moderna’s share price dropped sharply, reflecting concerns about possible regulatory changes and a shift in vaccine policy under Kennedy’s leadership. While he has suggested that he won’t take vaccines away from anyone, analysts believe that his skepticism towards vaccines could create a less favorable environment for Moderna, as well as potential disruptions in vaccine distribution and public health initiatives.
Moreover, if confirmed, Kennedy’s stance and policies could exacerbate existing vaccine hesitancy, impacting both current and future vaccine uptake in the U.S. This could present a huge challenge for Moderna, which has a large portfolio of vaccines in development while also hemorrhaging cash.
Moderna’s Trajectory Concerns Me
The nomination of a vaccine skeptic to the most important job in U.S. healthcare compounds my concerns about the company’s earnings trajectory. According to the current consensus forecasts — most of the forecasts were made before the MAHA nomination — Moderna won’t return to profitability until the financial year ending December 2029. In fact, the company is currently forecasted to report a loss of $9.32 in 2024 and $8.81 in 2025.
This is then compounded by smaller but still significant losses per share of $6.80 and $3.78 in 2026 and 2027, respectively. It doesn’t take too much math to realize that a company that trades at around $38 and is forecasted to lose $28.71 per share over the next four years is in somewhat of a precarious position. What’s more, this precarious position makes Moderna vulnerable to external change. For example, what would happen if Kennedy pushed COVID-19 vaccine procurement towards non-mRNA products?
Surely, this would have a profound impact on losses over the course of this administration at least. For further context, Moderna currently has around $6.87 billion in cash and no significant debt. However, this cash holding represents a significant decrease from $8.52 billion at the end of Q1 2024, indicating a high cash burn rate of approximately $825 million per quarter. Despite recent cost-cutting initiatives, these are fairly ominous figures.
Is Moderna Stock a Buy, According to Analysts?
On TipRanks, MRNA comes in as a Hold based on six Buys, 11 Holds, and three Sells assigned by analysts in the past three months. The average MRNA stock price target is $77.35 per share, implying 108% upside potential.
The Bottom Line on Moderna Stock
While many investors might be excited about the company’s pipeline, the consensus of analysts is clearly concerned about its ability to commercialize these vaccines this decade. And as highlighted by the earnings forecast, Moderna may need to raise additional capital in the coming years in order to bring these new products to market. Personally, despite the stock plummeting in recent months, I’m still not convinced that this is the bottom, and an investment in Moderna could be dead money.
