The COVID-19 pandemic officially came to a close several months ago, allowing the public to return to a semblance of normal life. This was great news for many sectors of the economy, but not all. Moderna Inc., which gained widespread recognition for being one of the first companies to introduce COVID-19 vaccines to the world, has been grappling with the challenge of finding its next major breakthrough. As demand for vaccines and treatments for the virus dwindled, investors began to withdraw their support, leading to an eight-day losing streak in Moderna’s stock.
Moderna has witnessed a significant erosion of $6.8 billion in its market value this week, following a warning from its rival Pfizer Inc., which lowered its profit outlook late last Friday. Pfizer’s caution signalled a decline in the demand for its COVID shots and pills. Moderna’s stock price has reached its lowest point since November 2020, a time when the company was actively seeking authorization for its COVID vaccine in the United States.
Hartaj Singh, an analyst at Oppenheimer, emphasized, “Concerns about COVID-19 vaccine revenue are currently at an all-time high. A strong performance in the third quarter should alleviate some of these concerns. Positive revenue guidance early next year for 2024 could potentially rekindle the stock’s momentum.”
As Moderna grapples with the challenge of moving beyond its highly successful Spikevax vaccine, Wall Street remains divided on its prospects. Out of the 24 analysts tracked by Bloomberg, half recommend buying the stock, while the other half, including Hartaj Singh, who rates the stock as “market perform,” are less enthusiastic, with ten analysts suggesting holding the stock and two recommending selling.
The vaccine manufacturer is actively exploring the potential of its messenger-RNA technology in combatting other diseases, including cancer. Additionally, they are working on a combination shot for flu and COVID and an RSV vaccine. Since its peak in August 2021, when it had a market capitalization of nearly $200 billion, Moderna’s stock has seen an approximately 83% decline. The decline in optimism regarding future COVID sales and investors’ shift towards stocks related to the new category of weight-loss drugs known as GLP-1s have significantly impacted Moderna’s performance. A company once likened to Tesla Inc., Moderna now stands as one of the worst-performing S&P 500 companies this year.
Following Pfizer’s announcement, Moderna’s management has reaffirmed its guidance for vaccine sales for the entire year. They still anticipate revenue ranging from $6 billion to $8 billion from COVID shots, while cautioning that it is still too early to make predictions about vaccination rates in the United States.
Myles Minter, an analyst at William Blair, projects that Moderna’s U.S. COVID sales will likely fall at the lower end of the guidance range based on updated guidance and demand commentary from Pfizer.
Pfizer, for its part, initially recovered after its announcement, registering a 3.6% gain on Monday as investors weighed the drugmaker’s post-pandemic growth strategy and reset their expectations. Similar to Moderna, Pfizer’s stock has languished, experiencing a decline of about half its value from its pandemic peak.
Moderna is expected to release its third-quarter earnings results in November.
