Moderna Skids On More Than $2 Billion Guidance Miss

Moderna (MRNA) stock toppled Thursday after it lowered sales expectations by at least $2 billion as waning Covid shots champ at sales.

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For the year, Moderna expects $5 billion in sales of its Covid vaccine — the company’s only product. The projection is based on contracts already in place, though Moderna notes there’s a potential for additional sales from the U.S., Europe, Japan and “other key markets.”

The forecast widely missed Wall Street expectations. Analysts polled by FactSet called for $7.96 billion in total revenue, including $7.37 billion from the Covid vaccine, Spikevax. Lee Brown, global sector lead for health care at research firm Third Bridge, said he’s seen revenue estimates approaching $8.1 billion.

Complicating matters, Moderna expects the majority of sales to come in the back half of 2023. The firm expects $2 billion in the first six months of the year. Brown notes analysts had projected nearly $3 billion in sales during that time period.

Wall Street’s expectations will potentially need “to come down if the demand beyond the (advanced purchase agreements) wanes more than estimated, which seems to be a risk given consensus will need to increasingly backload revenue into the second half,” Brown said in a note to clients.

In morning trades on the stock market today, Moderna stock skidded 3.9% near 152.

Moderna Stock: Earnings Come In Light

The fourth quarter came up mixed for Moderna. Revenue beat expectations at $5.08 billion, but declined 29.5%. Analysts projected $5.02 billion in sales. Moderna also earned $3.61 per share, below forecasts for $4.60 a share, according to FactSet. Earnings crashed 68%.

Both pitfalls were expected with Covid vaccinations and boosters slowing to a crawl. To date, more than 69% of the U.S. is fully vaccinated against the respiratory virus. About 16% of people have gotten one of the updated boosters from Moderna or Pfizer (PFE)/BioNTech (BNTX).

Third Bridge’s Brown noted the earnings downfall shouldn’t come as a surprise. Moderna is investing heavily in research and development. Both selling, general and administration expenses and spending on research and development increased roughly 87% during the quarter.

That “drove down earnings as the company continues to heavily invest in its clinical development activities, particularly (respiratory syncytial virus), seasonal flu and (cytomegalovirus) programs,” he said. “Moderna also increased its marketing spend in support of its commercial activities.”

Moderna’s Push Into RSV

Moderna stock analysts are closely watching the company’s next efforts beyond Covid. Late Wednesday, the Food and Drug Administration granted Moderna’s personalized cancer vaccine a breakthrough designation in melanoma treatment, in combination with Merck‘s (MRK) Keytruda. The designation allows the agency to expedite its review process.

The company also is working 0n vaccines for respiratory syncytial virus and cytomegalovirus — known by the short forms RSV and CMV. Both are common viruses but can be serious in infants and older adults. RSV causes cold-like symptoms and CMV leads to fever, sore throat, fatigue and swollen glands. Babies born with CMV often experience long-term problems.

Zhyar Said, an analyst with research firm Citeline, says the RSV vaccine will be key. Moderna is gearing up to ask the FDA for approval in the first half of the year. That puts it on track to rival Pfizer and GSK (GSK) when the next RSV season kicks off, likely this fall.

“Even though Moderna made their presence known in the Covid-19 market, it seems that they are now moving on to the RSV market,” he said in a note. “Going head-to-head with GSK’s RSV jab, Moderna is doing well to be a main contender as data has shown an 83.7% vaccine (effectiveness).”

That vaccine also has a breakthrough designation.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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