What happened
Shares of Moderna (MRNA +4.15%) fell 5.6% on Friday, following bearish analyst commentary.
So what
SVB Securities analyst Mani Foroohar placed an underperform rating on Moderna's stock. He now sees the biotech's share price falling roughly 33% to $93.
NASDAQ: MRNA
Key Data Points
Foroohar believes Moderna's recently released fourth-quarter results and guidance for 2023 show that the pandemic-driven surge in the company's sales and profits is ending. He also fears that Moderna's rising costs will eat into its profit margins.
Worse still, Foroohar notes that ongoing litigation could result in Moderna being forced to pay additional royalties for intellectual property claims.
"Collectively, these changes point to an extended period of underperformance as the operating leverage that made MRNA one of the greatest pandemic beneficiaries reverses," Foroohar said.
Now what
Foroohar's concerns are well founded. Moderna's revenue declined by nearly 30% to $5.1 billion in the fourth quarter, driven by lower sales of its COVID-19 vaccines. At the same time, it was forced to pay third-party royalties of $604 million to the National Institute of Allergy and Infectious Diseases. The new license agreement will see Moderna pay "low single-digit royalties" on its future COVID-19 vaccine sales.
Looking ahead, Moderna said it has approximately $5 billion in contracted sales of its COVID-19 vaccines for 2023 delivery, though it noted the potential for it to strike additional supply agreements that could increase that figure. But as it currently stands, Moderna's vaccine sales are set to drop sharply from the roughly $19 billion in revenue the drugmaker generated in 2022.
