Moderna: R&D Day Brings Dramatic Strategic Shift; Lowering Our Fair Value Estimate by 38%

Moderna announced a strategic overhaul and new financial guidance at its R&D day on Sept. 12, and we’ve lowered our fair value estimate to $141 per share from $227. We’ve repeatedly pointed to the potential of Moderna’s mRNA technology to help the firm build an economic moat and establish a portfolio of vaccines as well as oncology and rare-disease treatments, and our confidence in this potential remains steady. However, Moderna is facing several headwinds that are making its previously aggressive research and development strategy less feasible, including weak demand for covid vaccines, entrenched competition in respiratory syncytial virus vaccines, no accelerated approval pathway for its melanoma treatment, and a shrinking pool of cash from pandemic covid vaccine profits. Moderna is therefore focusing its cash and R&D efforts on 10 programs it sees as likely to reach the market by 2027, with estimated breakeven pushed back to 2028.