Dwindling Sales And Delayed Pipelines Will Weaken Biotech Outlook

Key Takeaways

• Lower demand for COVID and respiratory vaccines, combined with tighter healthcare budgets, is driving revenue declines and limiting pricing power.
  
• Revenue volatility and ongoing losses are likely as regulatory hurdles, intense competition, and dependence on few pipeline assets persist.
  
• A diversified late-stage pipeline, cost reductions, ongoing global expansion, and favorable healthcare trends are set to drive Moderna’s long-term growth and profitability beyond COVID-19.

Catalysts

A biotechnology company, provides messenger RNA medicines in the United States, Europe, and internationally.

• The ongoing normalization of post-pandemic COVID vaccine demand is leading to significantly lower sales volumes and revenue declines, and with only $86 million in product sales this quarter (down 35% year-over-year), the respiratory vaccine franchise faces a shrinking market as global vaccination fatigue and routine uptake take hold, which is likely to push total revenues lower for several years.
  
• Global health systems are under mounting pressure to control costs, resulting in increasing constraints on healthcare budgets and government spending—this may force further price concessions for both existing and new products, directly eroding Moderna’s pricing power and threatening sustained pressure on net margins in the long term.
  
• Heightened regulatory scrutiny and shifting global vaccine policies, including stricter requirements for placebo-controlled trials and longer timelines for key product approvals, are extending launch schedules for pipeline products like the flu-COVID combination and CMV vaccine, delaying revenue diversification and creating earnings headwinds through 2026 and beyond.
  
• Moderna’s heavy reliance on a handful of late-stage pipeline assets and recent pipeline reprioritizations expose the company to significant revenue volatility; if clinical or regulatory setbacks occur in RSV, flu, or oncology programs, there could be long gaps in product launches that would further depress both revenue growth and operating leverage.
  
• As competition intensifies across the mRNA and vaccine biotech space, large pharmaceutical peers and new entrants threaten to erode Moderna’s market share, likely forcing price competition and compressing top-line growth while rising operating expenses for R&D and commercial execution continue to drive persistent net losses and negative free cash flow, undermining long-term profitability.

Moderna Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more pessimistic perspective on Moderna compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
• The bearish analysts are assuming Moderna's revenue will decrease by 15.3% annually over the next 3 years.
• The bearish analysts are not forecasting that Moderna will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Moderna's profit margin will increase from -105.7% to the average US Biotechs industry of 12.0% in 3 years.
• If Moderna's profit margin were to converge on the industry average, you could expect earnings to reach $232.1 million (and earnings per share of $0.59) by about July 2028, up from $-3.4 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 40.8x on those 2028 earnings, up from -3.7x today. This future PE is greater than the current PE for the US Biotechs industry at 15.8x.
• Analysts expect the number of shares outstanding to grow by 0.61% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.4%, as per the Simply Wall St company report.

Moderna Future Earnings Per Share Growth

Risks

• Moderna is advancing a diversified late-stage pipeline targeting up to 10 product approvals by 2028 across respiratory, infectious disease, rare disease, and oncology, which could drive substantial new revenue streams and reduce dependency on COVID-19 vaccines, likely supporting long-term revenue growth and earnings stability.
  
• The company is achieving significant ongoing cost reductions, with a planned 55% drop in annual GAAP expenses from 2023 to under $5 billion by 2027 and targeting cash breakeven by 2028, which could meaningfully improve net margins and future profitability.
  
• Approvals and commercial launches of new vaccines (such as RSV, CMV, norovirus, and personalized cancer therapies like Intismeran and checkpoint inhibitors) are progressing, expanding Moderna's addressable market and positioning the company for top-line growth beyond its current core products.
  
• The company continues to benefit from long-term industry and secular trends such as an aging population, increased prevalence of infectious and chronic diseases, and rising global healthcare spending, which can sustain or accelerate demand for Moderna’s products and support revenue over time.
  
• Progress on operational efficiencies, manufacturing scale-up (with new plants in Australia, Canada, and the U.K.), and successful digitalization and procurement efforts may lead to lower cost of goods sold and operational expenses, directly boosting net margins and free cash flow potential in future years.

Valuation

• The assumed bearish price target for Moderna is $20.0, which represents the lowest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Moderna's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $198.0, and the most bearish reporting a price target of just $20.0.
• In order for you to agree with the bearish analysts, you'd need to believe that by 2028, revenues will be $1.9 billion, earnings will come to $232.1 million, and it would be trading on a PE ratio of 40.8x, assuming you use a discount rate of 6.4%.
• Given the current share price of $32.15, the bearish analyst price target of $20.0 is 60.7% lower.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.