What a wild ride, from $160’s to the $30’s in just six months. While traders love the volatility, the question is where is this firm headed? The darling of 2021 has by late 2024 become a concern for many. Here are some of the big points.
- Potential removal from the Nasdaq 100
- Breakeven Profitability forecasted to occur in 2027-2028
- A 100%+ surprise on revenue in Q3 2024 while the earning call reiterated full year 2024 revenue, suggesting Q4 revenue will come in cool.
The question is how to trade this going into 2025. Certainly there is a risk event coming with the new Trump transition and his appointments. We expect to see increased scrutiny with Dr. Jay Bhattacharya, a leading proponent of the HOPE Accord, now taking the helm at the NIH. The HOPE Accord calls for the suspension of mRNA based vaccines until further safety testing can be completed and informed consent can be provided. Similar attention may follow the appointment of Dave Weldon, a former Congressman from Florida as the new head of the CDC. A 2024 Forbes article framed Weldon as “longtime vaccine skeptic,” despite being, “a practicing medical doctor.”1
On the upside, we may see interim phase 3 trial data come out for the CMV product around January 2025. The assets per share are ~$31.00 as of Q3 2024 and the cash per share is ~$18.00 in contrast of share prices hovering around $40 in December of 2024. The question is where is the upside for this company in the next 12 months? With twenty-four analysts covering this firm, the average view is that revenue will drop by $500 million from full year 2024 to full year 2025. This suggests that a CMV vaccine launch is not considered to have a significant boost to sales. There is also a court date with Arbutus Pharmaceutical scheduled for the autumn of 2025. If share prices were to fall below the asset per share of $31.00, Moderna would become an instant takeover target. It seems that for shares to fall below $31.00 it would require their lead vaccine to be suspended as some like, Dr. Jay Bhattacharya are calling for. Should that occur, it would be hard to see the company as anything other than a bankruptcy target. Perhaps for this reason Moderna is the most heavily shorted firm in the S&P500 healthcare sector at a current short float of 11.90%.
Disclaimer – at the time of this writing the author does have both long and short positions resulting in a net short position on Moderna shares.
References:
- https://www.forbes.com/sites/joshuacohen/2024/12/03/nominee-for-cdc-director-weldon-may-push-for-big-changes-in-vaccine-policy/
