Earlier today, Biotech firm Moderna (MRNA) announced plans to cut around 10% of its global workforce by the end of the year as sales of its COVID-19 vaccines continue to decline. Indeed, Moderna’s first‑quarter vaccine sales in May missed Wall Street expectations, and its stock has fallen by more than 20% this year, which is adding pressure to reduce costs. In a memo to employees, CEO Stéphane Bancel said that the company expects to have fewer than 5,000 employees by year‑end, down from roughly 5,800 workers in 2024.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
It is worth noting that the layoffs are just a part of the firm’s plan to cut $1.5 billion in annual operating expenses by 2027, which builds on earlier cost‑saving measures. Interestingly, Bancel said that progress is being made on this front by scaling back on research and development, concluding trials on respiratory products, renegotiating supplier agreements, and lowering manufacturing costs. Although the CEO emphasized that everything was done to avoid job losses, he said that restructuring is still necessary in order to align with “the realities of our business” while continuing to invest in new science.
It also doesn’t help the firm that new policy challenges under Health and Human Services Secretary Robert F. Kennedy Jr. are creating an uncertain environment for the overall vaccine industry. Nevertheless, despite the cuts, Moderna maintains that its outlook remains positive. In fact, the company now has three approved products, including a next‑generation COVID-19 shot cleared by the FDA in May, and sees the potential for up to eight additional products in the next three years. Moderna will provide further business updates when it reports quarterly results on Friday.
Is MRNA Stock a Good Buy?
Turning to Wall Street, analysts have a Hold consensus rating on MRNA stock based on three Buys, 13 Holds, and three Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average MRNA price target of $48.14 per share implies 57% upside potential.
