On Thursday, Jefferies reaffirmed its Buy rating and $120.00 price target for Moderna (NASDAQ:MRNA), traded on NASDAQ:MRNA, even as the biotechnology company announced a shift in its R&D spending strategy and updated its financial forecasts. Moderna's recent disclosure indicated plans to reduce R&D expenditures, with the majority of the $1.1 billion cutback commencing in 2027. This adjustment is set to postpone the company's path to profitability until 2028, diverging from the previous expectation of 2026.
The firm's revenue guidance for 2025 has been revised to a range of $2.5 to $3.5 billion, falling short of the market consensus, which anticipated revenues between $3.8 and $4 billion. Despite these changes, the updates were in line with Jefferies' projections.
Moderna's announcement detailed that while some R&D cost reductions will start to take effect in 2026, the substantial portion of the planned cuts will not be implemented until 2027, with a cumulative R&D spend of approximately $11.5 billion estimated for the period of 2026 to 2028.
In addition to R&D adjustments, Moderna expects a general uptick in SG&A expenses in anticipation of future product launches. The revenue guidance for 2025 has been adjusted downward from the previously forecasted range for 2024, which was $3 to $3.5 billion. The company now aims to reach a break-even point by 2028, assuming a significant increase in revenue to $6 billion from the projected $2.5 to $3.5 billion in the following year.
Moderna has also updated its end-of-year 2025 cash position estimate to approximately $6 billion, which is at the lower end of the prior guidance range of $6 to $7 billion. The company maintains that it has adequate cash reserves to fund its operations until it breaks even and does not anticipate the need to raise additional equity.
However, Jefferies suggests that investor confidence in this plan may remain a topic of debate until the company can demonstrate further credibility in its financial strategy.
InvestingPro Insights
As Moderna (NASDAQ:MRNA) navigates through strategic shifts in its R&D spending and financial forecasts, real-time data and insights from InvestingPro provide a deeper understanding of the company's current financial health and market performance. According to the latest InvestingPro data, Moderna holds a market capitalization of $30.56 billion, with a negative P/E ratio reflecting its lack of profitability over the last twelve months as of Q2 2024. This aligns with the company's recent announcement of a delayed path to profitability until 2028. Additionally, the company's stock price has experienced significant volatility, with a notable decline of 46.18% over the last three months.
InvestingPro Tips highlight that Moderna holds more cash than debt on its balance sheet, which supports the company's assertion of having adequate cash reserves to fund operations until it reaches a break-even point. However, analysts have revised their earnings downwards for the upcoming period, and a sales decline is anticipated in the current year. These factors may contribute to the ongoing debate regarding investor confidence in Moderna's financial strategy. For a more comprehensive analysis, there are additional InvestingPro Tips available on the platform, which may offer further insights into Moderna's market position and future prospects.
With the next earnings date set for October 31, 2024, investors and analysts will be closely watching Moderna's performance metrics and updates. The company's ability to adhere to its revised financial forecasts and R&D spending strategy will be critical in shaping market perceptions and investor sentiment. To stay informed on Moderna's progress and to access a full range of expert financial tips, interested parties can visit InvestingPro's dedicated page for Moderna at https://www.investing.com/pro/MRNA.
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