Biotechnology company Moderna (NASDAQ:) gained the spotlight in the medical sector as a leader in the race toward a COVID-19 vaccine. Its messenger RNA (mRNA) technology garnered acclaim as a next-generation therapy. In a nutshell, mRNA therapy involves using messenger RNA molecules to deliver instructions to cells to produce certain proteins that can trigger an immune response or target disease-causing proteins like cancer. mRNA therapy has the potential to treat infectious diseases like RSV, Zika, and HIV, as well as help create cancer vaccines. However, the company has struggled to diversify revenues as COVID-19 therapies still generate the majority of its revenues, which have been on a downward trajectory for years.
Moderna’s RSV Franchise Is Still Relatively Small
Moderna’s mRESVIA is the first FDA-approved mRNA therapy designed to prevent respiratory syncytial virus (RSV) in adults 60 and over. The EU, Norway, Iceland, and Qatar have also approved it. RSV is a common and highly contagious respiratory virus that infects the throat, nose, and lungs. It is often mistaken for a common cold, but it has the potential for severe infections in those with weakened immune systems. mRESVIA faces stiff competition from Pfizer (NYSE:) Abrysvo and GSK (NYSE:) Arexvy. MRNA is conducting more studies to try to expand approval to infants and younger adults. Moderna only collected about $10 million in mRESVIA sales in Q3 2024, a speck compared to the $1.8 billion in Spikevax COVID-19 vaccine sales. The total revenues for Q3 were $1.9 billion, which illustrates the one-sided dominance of COVID-19 sales for the company.
Moderna expects to receive 10 product approvals in the next three years and is focused on its pipeline and cutting costs. However, the company has engaged in a cost-cutting plan that will lower research and development expenses to narrow its focus to getting its most promising drugs approved before the cash runs out. Moderna ended 2024 with $9.5 billion in cash.
Business Update: Lowered 2025 Forecast Sinks Shares
On January 13, 2025, Moderna provided a business update and also lowered full-year 2025 forecasts below estimates. The company is prioritizing its portfolio to address respiratory viruses, rare diseases, oncology, and viruses where there is an unmet need (enabling quicker FDA approval). Fiscal 2025 revenues are expected to be between $1.5 billion to $2.5 billion versus $2.92 billion consensus analyst estimates. Moderna expects to reduce 2025 cash cost expenses by $1 billion and an additional $500 million in 2026. It expects to end 2025 with a cash balance of $6 billion.
Moderna CEO Stephane Bancel commented, “In 2024, we achieved $3.0 – 3.1 billion in product sales, approval of our RSV vaccine and continued to adapt our COVID-19 business for the endemic setting. At the same time, we reduced our cash operating cost by over 25 percent compared to 2023 and aim to reduce 2025 cash costs by $1 billion with a plan for an additional $500 million cost savings in 2026,” said Stéphane Bancel, Chief Executive Officer of Moderna. “We remain focused on our three strategic priorities: driving sales growth, delivering up to 10 product approvals over the next three years, and reducing costs across our business.”
MRNA Stock Is in a Descending Triangle Pattern
A descending triangle is normally a bearish chart pattern. It is comprised of a descending (falling) upper trendline resistance capping bounces converging with a flat-bottom lower trendline that provides a floor on pullbacks. A breakdown triggers if the stock falls below the lower trendline support. However, a breakout can trigger if the stock surges through the upper trendline resistance.
MRNA formed a descending trendline comprised of a descending upper trendline resistance that started at $48.92, converging with a flat-bottom lower trendline support at $33.31. The triangle encompasses the 17% gap down on the lowered guidance. The daily anchored VWAP is flat at $33.43, along with the daily RSI which is also flat at the 34-band. MRNA is nearing the apex point, at which time it should break to the downside or the upside depending on which trendline it pierces. (Fib) pullback support levels are at $33.31, $31.28, $28.95, and $24.77.
MRNA stock’s average consensus price target is 122% higher at $75.58, and its highest analyst price target sits at $179.00. Analysts will likely revise forecasts and price targets. It has six Buy ratings, 13 Hold ratings, and four Sell ratings from analysts. The stock has an 11.03% short interest.
Actionable Options Strategies: Bullish investors can consider using cash-secured puts at the Fib pullback support levels to buy the dip. If assigned the shares, then writing covered calls at upside Fib levels executes a wheel strategy for income.
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