Will Moderna Stock Drop to $25? 1 Wall Street Analyst Thinks So.

Moderna, Inc. (MRNA), the biotechnology company behind the successful COVID-19 vaccine Spikevax, has seen its stock price fluctuate in recent months. One Wall Street analyst, Jessica Fye of J.P. Morgan, has a bearish outlook on the company's shares, predicting a significant drop to $25 per share in the coming year. This prediction is at odds with the broader consensus of analysts, who have an average price target of $78.83 for the stock. This article explores the factors behind Fye's bearish stance and the potential catalysts that could trigger a decline in Moderna's stock price.



Fye's prediction is based on several specific factors that she believes will negatively impact Moderna's stock price. These include:

1. Reduced COVID-19 demand: With the pandemic largely under control, demand for COVID-19 vaccines has significantly decreased. This reduction in demand is expected to lead to a decrease in revenue for the company, which could put downward pressure on the stock price.
2. Accelerated launch of updated vaccines: The FDA's early approval of updated vaccines allowed Moderna to meet demand in the previous quarter. However, this also led to a decrease in revenue for the company, as the accelerated launch of updated vaccines reduced the need for the original Spikevax vaccine.
3. Margins below consensus: While the company's cost-cutting efforts helped to mitigate the impact of reduced revenue, the net result was a nearly $3.00 per share loss that outperformed analysts' expectations. This indicates that the company's margins are below consensus estimates, which could lead to further downward pressure on the stock price.
4. Balance sheet concerns: The company's balance sheet reflects the impact of structural cost-savings efforts and its cash-burning research. This has led to a reduction in current and total liability, offset by a reduction in cash and current and total assets. Equity, the measure of shareholder value, fell nearly 30% for the quarter and is expected to continue to decrease before the value is built. This could be a headwind for price action in 2025, as the company may struggle to maintain its share price in the face of these financial challenges.
5. Short-seller activity: The stock has a high short interest, which makes it the most-shorted major biotech stock. This sets it up for a short-covering rally or squeeze, given a catalyst. However, the analysts and institutions have put a floor in the market, and the outlook for 2025 is for business improvements. This suggests that the short-covering rally may not materialize, and the stock price may continue to decline.



These factors, taken together, lead Fye to predict a significant drop in Moderna's stock price. However, it is essential to note that this prediction is based on her analysis and may not reflect the broader consensus of Wall Street analysts. Additionally, the potential catalysts that could trigger a decline in Moderna's stock price to the predicted level of $25 include cost-management struggles, legal headaches, clinical trial setbacks, analyst downgrades, and market sentiment.

In conclusion, while one Wall Street analyst predicts a significant drop in Moderna's stock price, the broader consensus remains more optimistic. Investors should carefully consider the factors behind Fye's bearish stance and the potential catalysts that could impact the company's stock price before making any investment decisions. As always, it is crucial to stay informed and monitor the latest developments in the biotechnology sector to make well-informed investment choices.