Moderna stock price target lowered to $25 at RBC on cost-cutting plans

Investing.com - RBC Capital has lowered its price target on Moderna (NASDAQ:MRNA) to $25.00 from $28.00 while maintaining a Sector Perform rating on the stock. The new target is below InvestingPro’s Fair Value estimate, suggesting the stock may be undervalued despite trading near its 52-week low of $22.32.

The adjustment follows Moderna ’s analyst day where the company announced an additional $1 billion in cost savings, split equally between 2026 and 2027, as vaccination rates have declined 28% this year. The company also revealed plans for a $1.5 billion debt deal to provide flexibility in managing uncertainties and future opportunities. These cost-cutting measures come as Moderna is quickly burning through cash, with negative free cash flow of $2.65 billion over the last twelve months, though its current ratio of 3.93 indicates liquid assets still comfortably exceed short-term obligations.

Despite current challenges, Moderna projects its top-line will re-inflect next year with up to 10% year-over-year growth, driven by COVID contracts outside the United States in markets including the UK, Canada, and Australia, along with uptake of its next-generation COVID vaccine. This optimistic outlook contrasts with current analyst expectations of a 42% revenue decline for fiscal year 2025, according to InvestingPro data, which offers comprehensive research reports on over 1,400 US equities including Moderna.

The company has discontinued several programs including CMV, HSV, VZV, and GSD1a, while maintaining focus on its cancer vaccine with pivotal data potentially arriving as early as third quarter 2026. Other pipeline priorities include flu vaccine submissions expected in the US, EU, Canada, and Australia by January 2026, and a combination flu+COVID vaccine already filed in the EU and Canada.

Moderna reiterated that breaking even by 2028 remains possible, contingent upon approvals for its flu, flu+COVID, norovirus, cancer vaccine, PDL-1/IDO, and PA products.

In other recent news, Moderna has outlined a growth strategy targeting a 10% revenue increase by 2026. The company aims to expand its seasonal vaccine franchise from three to potentially six approved products by 2028, supporting its oncology and rare disease programs. Additionally, Moderna has secured a $1.5 billion credit facility from Ares Management, which includes a $600 million initial term loan and options for further funding contingent on regulatory milestones. The biotechnology firm is also expanding its U.S. manufacturing capabilities with a new drug product facility in Norwood, Massachusetts, representing an investment of over $140 million. This expansion is expected to create hundreds of biomanufacturing jobs. Furthermore, Moderna’s shareholders have approved a stock option exchange program for non-Executive Committee employees, with significant support from the voting body. These developments indicate a strategic focus on growth and operational expansion for Moderna.

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