Moderna (MRNA) stock is plunging Thursday after the COVID-19 vaccine maker announced plans to slash research and development (R&D) expenses and instead focus on receiving approvals for the many drugs in its pipeline.
Moderna's plans include a $1.1 billion reduction in R&D expenses by 2027 to a range of $3.6 billion to $3.8 billion. Rather than spending to explore new products, the company will shift its focus to winning approvals for the 10 products in its pipeline.
"Moderna now has five respiratory vaccines with positive Phase 3 results and expects to submit three for approval this year," said Moderna CEO Stéphane Bancel in a statement. "In addition, we have five non-respiratory products in pivotal studies across cancer, rare diseases and latent vaccines with potential for approval by 2027."
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Bancel adds that "the size of our late-stage pipeline combined with the challenge of launching products means we must now focus on delivering these 10 products to patients, slow down the pace of new R&D investment, and build our commercial business."
The shift in strategy comes as Moderna has seen a sharp decline in sales of its COVID-19 vaccine, including a 37% year-over-year decrease in its most recent quarter.
In the release, Moderna also said it anticipates fiscal 2025 revenue to be in the range of $2.5 billion to $3.5 billion and sales to grow at a 25% compound annual growth rate from 2026 to 2028, "driven by new product launches."
The midpoint of MRNA's revenue outlook for its upcoming fiscal year, $3 billion, came in well below analysts' expectations. Wall Street is expecting revenue of $3.74 billion in fiscal 2025, according to Yahoo Finance.
Is Moderna stock a buy, sell or hold?
Moderna had a good run up the price charts to start 2024, but the healthcare stock is now down 33% for the year to date. Still, Wall Street remains bullish on the drugmaker.
According to S&P Global Market Intelligence, the consensus analyst target price for MRNA stock is $125.71, representing implied upside of more than 90% to current levels. Additionally, the consensus recommendation is Buy. However, analysts may revise their targets lower following the reaction to its updated R&D plans.
And some analysts are already on the sidelines when it comes to the large-cap stock, including financial services firm William Blair, which has a Market Perform rating (equivalent to a Hold) on MRNA.
"Like other biotechnology companies with development pipelines, Moderna's risks center on commercial, regulatory, and clinical development," said William Blair analyst Myles Minter in an August 16 note.
The analyst adds that key risks specific to Moderna include the "potential for greater-than-anticipated drop-off in the COVID market, possible failure to show equivalent efficacy across various flu strains versus currently available and other emerging flu vaccines, poor tolerability and/or efficacy with repeat mRNA therapeutics dosing, and other potential clinical setbacks including failed or delayed trials."
Related Content
-
Stock Market Winners and Losers of the 'Big, Beautiful' BillDefense, manufacturing and tech should prosper, while health care and green energy stocks face hurdles.
-
I'm a Financial Planner: Here's How to Invest Like the Wealthy, Even if You Don't Have MillionsPrivate market investments, once exclusive to the ultra-wealthy and institutions, have become more accessible to individual investors, thanks to regulatory changes and new investment structures.
-
Four Ways a Massive Emergency Fund Can Hurt You More Than It HelpsSaving too much could mean you're missing opportunities to put your money to work. Redirect some of that money toward paying off debt, building retirement funds, fulfilling a dream or investing in higher-growth options.
-
With Buffett Retiring, Should You Invest in a Berkshire Copycat?Warren Buffett will step down at the end of this year. Should you explore one of a handful of Berkshire Hathaway clones or copycat funds?
-
I'm a Financial Planner: How to Dodge a Retirement Danger You May Not Have Heard AboutTiming is everything, and sequence of returns risk can mean the difference between a retirement nest egg that's overflowing … or empty.
-
Caring for Aging Parents: An Expert Guide to Easing the Financial and Emotional StrainEarly conversations, financial planning and understanding the progression of care needs can help to mitigate stress and protect family relationships.
-
Dow Adds 238 Points as UNH, CAT Pop: Stock Market TodayThe lack of a September jobs report didn't seem to worry market participants, with the data delayed due to the ongoing government shutdown.
-
I'm a Financial Adviser: The OBBB Is a Reminder for Older People to Have a Long-Term PlanThe new tax bill presents a good opportunity for retirees to revisit tax plans, look into doing some Roth conversions and consider plans for long-term care.
