On Tuesday, Deutsche Bank (ETR:DBKGn) shifted its stance on Moderna (NASDAQ:MRNA) shares, raising the rating from Sell to Hold, while also adjusting the price target to $80 from $85. This change comes after a review of the company's second-quarter performance, which the bank described as challenging. The quarter saw a combination of downgraded revenue forecasts, reduced gross margins, and unchanged operating expense guidance, confirming some of the bank's previous concerns about Moderna's financial outlook for the winter of 2024.
Moderna's financial situation indicates a diminishing cash balance, projected to fall from approximately $9 billion at the end of 2024 to around $6-7 billion by the end of 2025. This projection is based on an expected return to revenue growth, which Deutsche Bank views as somewhat speculative. The bank does not anticipate an easing of Respiratory Syncytial Virus (RSV) dynamics, although there is a potential for revenue from a flu vaccine to begin contributing.
Despite these challenges, Deutsche Bank believes the risk-reward balance for Moderna may now be more even. The bank expects that operating expenses could moderate if revenue growth resumes as speculated, and there is still potential for a combined flu and COVID-19 vaccine.
Deutsche Bank has had a fluctuating view of Moderna's stock over the past few years. It initially recommended selling in October 2021, upgraded to buy in September 2022, and reverted to sell in November 2023. The bank's latest move to a Hold rating reflects their revised net present value base-case assessment, after taking into account various factors impacting the company's future financial performance.
In other recent news, Moderna is navigating a complex vaccine market, with RBC Capital downgrading its stock from 'Outperform' to 'Sector Perform'. This change reflects concerns about Moderna's near-term challenges, particularly with its Respiratory Syncytial Virus (RSV) and COVID-19 vaccines. The company's revenue is anticipated to plateau in the range of $3-4 billion for the foreseeable future.
Moderna recently reported a net loss and a drop in COVID-19 vaccine sales outside the U.S. in its second-quarter 2024 earnings call. Despite these challenges, the company launched its RSV vaccine, mRESVIA, in the U.S., and received a positive opinion from the European Medicine Agency. They also reported positive Phase III results for its flu and COVID-19 combo vaccine.
Moderna revised its 2024 net product sales outlook to between $3.0 billion and $3.5 billion, citing various market pressures and potential revenue deferrals. The company also highlighted its AI-driven HR initiatives and its focus on managing expenses while preparing for the upcoming COVID season. These are recent developments that investors should keep in mind.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.