RBC Capital has adjusted its stance on Moderna (NASDAQ:MRNA) shares, moving from a bullish 'Outperform' rating to a neutral 'Sector Perform', with a reduced price target for the biotechnology company to $90 from the former $125.
The decision reflects concerns over near-term challenges that Moderna is facing in the vaccine market, particularly with its Respiratory Syncytial Virus (RSV) and COVID-19 vaccines.
The downgrade comes after Moderna revealed last week that it encountered obstacles in the RSV vaccine market. Notably, competitors Pfizer (NYSE:PFE) and GlaxoSmithKline (NYSE:GSK) had already secured contracts with major pharmacies by the time Moderna's vaccine was approved.
This could place Moderna at a competitive disadvantage since these companies can offer package deals with their other approved drugs, said an analyst from RBC. Furthermore, recent discussions at the Advisory Committee on Immunization Practices (ACIP) meeting indicated that the RSV vaccine might only be a one-time shot without the need for annual boosters, potentially limiting the market opportunity.
In the COVID-19 vaccine arena, Moderna faces additional headwinds. The company disclosed last week that it is unlikely to win the European Union tender for up to 144 million doses. Moreover, there may be further deferrals in advanced purchasing agreements worldwide, and competition in the United States is becoming more fierce in terms of market share and pricing.
Despite the potential for Moderna's mRNA platform in cancer vaccines and other applications, the immediate financial outlook is not as strong as previously expected. RBC Capital anticipates Moderna's revenue to plateau in the range of $3-4 billion for the foreseeable future. The company's hesitance to aggressively cut costs is also a concern, with operating expenses projected to be "flat to down" next year despite guiding for an $8.2 billion expenditure this year.
InvestingPro Insights
As Moderna navigates the challenges outlined by RBC Capital, real-time data from InvestingPro provides additional context for investors. With a market capitalization of $33.28 billion, Moderna's financial health can be further assessed by considering its Price to Earnings (P/E) Ratio, which currently stands at -5.64, reflecting market sentiment about its future earnings potential. Despite a significant revenue decline of -52.6% over the last twelve months as of Q2 2024, Moderna holds more cash than debt on its balance sheet, which aligns with RBC Capital's note on the company's current cash balance.
InvestingPro Tips indicate that Moderna's Relative Strength Index (RSI) suggests the stock is in oversold territory, which may interest investors looking for potential entry points. However, it's important to consider that 11 analysts have revised their earnings downwards for the upcoming period, signaling caution. For those looking to delve deeper into Moderna's financials and future projections, there are additional InvestingPro Tips available, providing a comprehensive analysis of the stock's potential.
Finally, the InvestingPro Fair Value estimate of $93.13 suggests a more conservative outlook than the average analyst target, yet still offers a modest upside from the previous close price of $86.58. As the market continues to assess Moderna's position in the vaccine market and its broader financial health, these insights could prove valuable for investors making informed decisions.
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