Investing.com -- Shares of Moderna Inc. (NASDAQ:MRNA) plummeted by 6% on Monday at ET 6:54 am (1054 GMT) after RBC (TSX:RY) Capital Markets downgraded the biotech giant to “Sector Perform” from “Outperform” and slashed its price target to $90 from $125.
The brokerage cited mounting challenges in the RSV and COVID vaccine markets as primary reasons for the bearish outlook.
Analysts at RBC flagged that Moderna faces both short-term and long-term headwinds in the RSV vaccine market. While the company's product has shown promising efficacy and safety, competitors Pfizer (NYSE:PFE) and GSK have secured a head start in the market.
Additionally, the recent ACIP recommendation for a one-time RSV vaccination, rather than annual boosters, limits the long-term revenue potential for all players.
Moderna is encountering increasing competition and pricing pressures. In the U.S., Pfizer is regaining market share as new contracts are finalized, while Moderna has reduced its 2024 revenue guidance.
Internationally, Moderna faces delays and challenges in securing advanced purchasing agreements and may struggle with European tenders.
Overall, RBC has revised its long-term COVID vaccine revenue forecast to $2.5 billion from $3.5 billion.
Despite these challenges, RBC maintains a long-term bullish view on Moderna's mRNA platform and its potential in the cancer vaccine space. The company's recent positive Phase II data for its melanoma vaccine candidate has generated excitement and raised hopes for its broader oncology pipeline.
However, the near-term headwinds in the vaccine market have overshadowed the positive outlook for Moderna's cancer pipeline, prompting the downgrade.
RBC cites several risks affecting Moderna, including competitive pressures, regulatory challenges, and potential long-term pricing pressures. Upside risks include better-than-expected vaccine revenues, effective cost management, or strategic acquisitions.