Moderna (MRNA 0.94%) became a hot investment during the pandemic as its COVID vaccine made investors bullish on its future. But you may be surprised to learn that now you can buy the stock around the levels it was at in April 2020 -- even before regulators approved its vaccine.
The past five years have resembled a boom-and-bust cycle for the stock as a surge in demand for its vaccine made it a red-hot buy. And now, with the public less concerned about COVID, its share price has gone over a cliff. In just 12 months, its stock is down 65%.
One way Moderna has been trying to appease investors and reduce its losses is by cutting costs. And that appears to be working, with the company recently reporting quarterly results showing a sizable decline in expenses. Can leaner, more efficient operations help lure back investors and make this a good healthcare stock to buy again?
NASDAQ: MRNA
Key Data Points
Moderna cut its operating expenses by 21% in the fourth quarter
In February, Moderna released its fourth-quarter numbers for the last three months of 2024. They weren't great. Sales totaling $966 million were just a fraction of the $2.8 billion it posted in the same period a year ago. Demand for its COVID vaccines simply hasn't been strong, and this trend may only continue in the future.
To combat this, Moderna has been slashing expenses. Its research and development costs have come down, as have its selling, general, and administrative costs. It incurred $2.2 billion in operating expenses during the quarter, which was lower than the $2.8 billion it posted in the same quarter last year.
And the company isn't done. CEO Stéphane Bancel says that the goal is to eliminate close to $1 billion in costs by the end of this year. It's a good sign for investors, but it may not necessarily be Moderna's biggest problem.
The company needs a significant catalyst to excite investors
Reducing costs is an excellent way for a company to improve its financials, especially when it sees many opportunities to do so. But in the past, investors have primarily been interested in Moderna's stock for its growth potential. Now, amid a more concerning outlook for the business, there isn't nearly as much optimism as there was a few years ago.
The big problem is that the company doesn't have a big revenue-generating product that can make it seem like a good buy, especially with its market capitalization still around $13 billion. It is working on an updated COVID vaccine, as well as a flu/COVID combination. But there isn't a huge blockbuster around the corner that can drastically turn things around for the business and definitively improve its top line.
The one wild card is the personalized cancer vaccine it is developing with Merck. But that's not guaranteed to obtain approval, and it's a risky reason to bet on the stock's success since cancer treatments typically have high failure rates.
Investors should hold off on Moderna stock
Moderna may seem like a cheap stock, closing at $33.90 on Monday -- well short of the more than $400 it climbed to in 2021. But there's little reason to expect that things will get better for the business anytime soon. Cutting costs may not be enough to get it back into the black, and it still needs a growth catalyst to give investors a reason to be optimistic about its future.
For now, Moderna may be a good stock to put on a watch list, but it's likely too risky and volatile for the vast majority of investors to put into their portfolios. Taking a wait-and-see approach may be the safest option today.
