Moderna: A Generational Opportunity for Investors in 2025

Key Points

• Moderna's stock price reset is over, and a buying opportunity is at hand that will provide years of upside for investors.
• The business hit bottom in Q4 2024 and is on track to resume growth as it diversifies away from COVID-19 vaccines. 
• Analysts' consensus sentiment puts a floor in the market that the institutional activity strengthens; the short interest is high and may lead to a short squeeze. 

As bad as it may look on the charts, Moderna’s NASDAQ: MRNA post-COVID let-down and market reset are over. The company stock trades at rock bottom in early 2025 and presents a generational opportunity in cutting-edge biotech. While COVID sales are lacking, the company has made significant progress in its pipeline, including two new approvals in F2024, three up for approval in 2025, and an expectation for as many as ten more within the next three years to drive revenue and eventual profitability.

Regarding revenue and profitability, 2024 was likely the bottom for business and a rebound is expected to begin soon, accelerating into F2026 and producing GAAP profits before the end of the decade. 

Moderna Hit Bottom in Q4, On Track for Rebound in 2025

Moderna’s business hit bottom in Q4 2024, with revenue down 66% YOY, aligning with analysts’ expectations. The decline is due primarily to reduced demand for COVID-19 products and the accelerated launch of updated vaccines in the U.S. The FDA’s early approval allowed the company to meet demand in the previous quarter, as seen in the Q3 results. The bad news is the margin, which came in below consensus.

The net result was a nearly $3.00 per share loss that outperformed despite the company’s cost-cutting efforts. However, the company has made significant structural changes and forecasts additional savings in 2025, improving the long-term profit outlook and setting it up to outperform as product approvals are issued. 

The balance sheet could be a headwind for price action in 2025. The balance sheet reflects the impact of structural cost-savings efforts and its cash-burning research. The net result is reduced current and total liability offset by reduced cash and current and total assets. Equity, the measure of shareholder value, fell nearly 30% for the quarter and will likely continue to decrease before the value is built.

The good news is that the pace of burn, guidance for 2025, and improving outlook for revenue, cash flow, and profitability suggest the company is sufficiently capitalized and unlikely to need additional funding. That is a critical detail because it reduces the risk of dilution for this pharmaceutical company. 

Analysts and Institutions Put a Floor in Moderna Stock Market

Moderna’s downtrend is driven by short-sellers, which have the short interest above 10% in 2025. That makes Moderna the most-shorted major biotech and sets it up for a short-covering rally or squeeze, given a catalyst. The short-covering rally could begin soon, possibly before the following earnings report is released, because the analysts and institutions have put a floor in the market, and the outlook for 2025 is for business improvements. 

The institutions have been bullish on MRNA stock for years, but buying dwindled in 2024 as the stock price fell to multiyear lows and reverted to selling in Q3. The good news is that their activity shifted to buying in Q4 when the stock price hit the low end of the analyst's target range and ramped higher in Q1 2025. The 2025 quarter-to-date activity is the most in two years and has institutional ownership up to 75%, firming the floor put in place by the analysts' price targets.

Moderna Trading Volume Increases as Price Action Hits Bottom

Moderna’s price action is noteworthy because the volume increased as it approached a long-term support target that aligns with the analysts' low-end range. That target is linked to price action in 2020, tied to the ramping COVID-19 epidemic, and likely a strong support level.

The risk is that the stock will fall below it. Still, such a move is unlikely due to the ramping volume, institutional activity, and analysts' sentiment, which suggests a double-digit upside. The more likely scenario is that MRNA’s stock price will consolidate at the current levels and move sideways until the market can gain traction. That is likely as growth resumes and product approvals are granted.