Moderna Earnings: Competition Weighs on Covid and RSV Vaccine Prospects, but We're Maintaining Our FVE

We're maintaining our $227 fair value estimate for no-moat firm Moderna despite disappointing management commentary surrounding the firm's competitiveness in the upcoming covid and RSV vaccination season and lower product sales guidance for the full year. Second-quarter results were in line with our expectations, with minimal product sales of $184 million consistent with our off-season expectations in the Covid vaccine market. However, management now expects $3 billion-$3.5 billion in net product sales for the full year (down from prior guidance of $4 billion) for its respiratory franchise due to a combination of low European Union sales, revenue being deferred to 2025 in other international markets, and the competitive landscape in the US. We think management's commentary implies that Moderna is seeing strong US pricing pressure in both the established covid vaccine market (against key competitor Pfizer) as well as in the RSV vaccine market, where Moderna is attempting to launch newly approved mResvia against Pfizer's Abrysvo and GSK's Arexvy, which were both introduced last season. As a result, we've lowered our assumed global covid vaccine sales for 2024 from $3.7 billion to $2.7 billion, and our assumed RSV vaccine sales in the US market from $500 million to $350 million. In the long run, we think Moderna is still capable of peak RSV vaccine sales around $2.5 billion, as approval should eventually extend to most high-risk populations and as recommendations for revaccination are issued.