What occurred 

Shares of Moderna (MRNA -5.63%) fell 5.6% on Friday, following bearish analyst commentary. 

So what

SVB Securities analyst Mani Foroohar positioned an underperform ranking on Moderna’s inventory. He now sees the biotech’s share worth falling roughly 33% to $93.

Foroohar believes Moderna’s just lately launched fourth-quarter outcomes and steerage for 2023 present that the pandemic-driven surge within the firm’s gross sales and earnings is ending. He additionally fears that Moderna’s rising prices will eat into its revenue margins. 

Worse nonetheless, Foroohar notes that ongoing litigation may lead to Moderna being pressured to pay extra royalties for mental property claims. 

“Collectively, these modifications level to an prolonged interval of underperformance because the working leverage that made MRNA one of many biggest pandemic beneficiaries reverses,” Foroohar stated. 

Now what

Foroohar’s considerations are nicely based. Moderna’s income declined by practically 30% to $5.1 billion within the fourth quarter, pushed by decrease gross sales of its COVID-19 vaccines. On the identical time, it was pressured to pay third-party royalties of $604 million to the Nationwide Institute of Allergy and Infectious Ailments. The brand new license settlement will see Moderna pay “low single-digit royalties” on its future COVID-19 vaccine gross sales.

Wanting forward, Moderna stated it has roughly $5 billion in contracted gross sales of its COVID-19 vaccines for 2023 supply, although it famous the potential for it to strike extra provide agreements that would enhance that determine. However because it presently stands, Moderna’s vaccine gross sales are set to drop sharply from the roughly $19 billion in income the drugmaker generated in 2022.