Moderna (MRNA)

Biotechnology company Moderna (NASDAQ:MRNA) reported Q3 CY2025 results beating Wall Street’s revenue expectations, but sales fell by 45.4% year on year to $1.02 billion. On the other hand, the company’s full-year revenue guidance of $1.8 billion at the midpoint came in 4.4% below analysts’ estimates. Its GAAP loss of $0.51 per share was 78.6% above analysts’ consensus estimates.

Company Overview

Rising to global prominence during the COVID-19 pandemic with one of the first effective vaccines, Moderna (NASDAQ:MRNA) develops messenger RNA (mRNA) medicines that direct the body's cells to produce proteins with therapeutic or preventive benefits for various diseases.

Over the next few years, therapeutic companies, which develop a wide variety of treatments for diseases and disorders, face strong tailwinds from advancements in precision medicine (including the use of AI to improve hit rates) and growing demand for treatments targeting rare diseases. However, headwinds such as rising scrutiny over drug pricing, regulatory unknowns, and competition from larger, more resourced pharmaceutical companies could weigh on growth.

Moderna's primary competitors include Pfizer/BioNTech (NYSE:PFE/NASDAQ:BNTX), which also produces an mRNA-based COVID-19 vaccine. Other competitors in the vaccine space include Novavax (NASDAQ:NVAX), Johnson & Johnson (NYSE:JNJ), and AstraZeneca (NASDAQ:AZN). In the broader mRNA therapeutics field, companies like CureVac (NASDAQ:CVAC) and Translate Bio (acquired by Sanofi) are also developing competing technologies.

Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.

With just $2.23 billion in revenue over the past 12 months, Moderna lacks scale in an industry where it matters. This makes it difficult to build trust with customers because healthcare is heavily regulated, complex, and resource-intensive.

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Luckily, Moderna’s sales grew at an incredible 55.3% compounded annual growth rate over the last five years. Its growth beat the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Moderna’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 50.5% over the last two years.

This quarter, Moderna’s revenue fell by 45.4% year on year to $1.02 billion but beat Wall Street’s estimates by 32%.

Looking ahead, sell-side analysts expect revenue to decline by 18.3% over the next 12 months. While this projection is better than its two-year trend, it’s hard to get excited about a company that is struggling with demand.

Moderna has been an efficient company over the last five years. It was one of the more profitable businesses in the healthcare sector, boasting an average operating margin of 24.2%.

Looking at the trend in its profitability, Moderna’s operating margin decreased significantly over the last five years. The company’s two-year trajectory also shows it failed to get its profitability back to the peak as its margin fell by 125.9 percentage points. This performance was poor no matter how you look at it - it shows its expenses were rising and it couldn’t pass those costs onto its customers.

In Q3, Moderna generated an operating margin profit margin of negative 25.6%, down 21.8 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Moderna’s earnings losses deepened over the last five years as its EPS dropped 37.9% annually. We tend to steer our readers away from companies with falling EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, Moderna’s low margin of safety could leave its stock price susceptible to large downswings.

In Q3, Moderna reported EPS of negative $0.51, down from $0.03 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects Moderna to perform poorly. Analysts forecast its full-year EPS of negative $8.07 will tumble to negative $9.92.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Moderna has shown robust cash profitability, giving it an edge over its competitors and the ability to reinvest or return capital to investors. The company’s free cash flow margin averaged 16.8% over the last five years, quite impressive for a healthcare business.

Taking a step back, we can see that Moderna’s margin dropped meaningfully during that time. Continued declines could signal it is in the middle of an investment cycle.

Moderna burned through $880 million of cash in Q3, equivalent to a negative 86.6% margin. The company’s cash burn slowed from $1.72 billion of lost cash in the same quarter last year. These numbers deviate from its longer-term margin, indicating it is a seasonal business that must build up inventory during certain quarters.

As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.

Moderna burned through $2.65 billion of cash over the last year. With $4.50 billion of cash on its balance sheet, the company has around 20 months of runway left (assuming its $686 million of debt isn’t due right away).

Unless the Moderna’s fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns.

We remain cautious of Moderna until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet.

It was good to see Moderna beat analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. On the other hand, its full-year revenue guidance missed. Overall, this print had some key positives. The stock traded up 7.7% to $25.35 immediately following the results.

Updated: November 25, 2025 at 11:05 PM EST

Before making an investment decision, investors should account for Moderna’s business fundamentals and valuation in addition to what happened in the latest quarter.

Moderna doesn’t pass our quality test. Although its revenue growth was exceptional over the last five years, it’s expected to deteriorate over the next 12 months and its declining EPS over the last five years makes it a less attractive asset to the public markets. And while the company’s strong operating margins show it’s a well-run business, the downside is its declining adjusted operating margin shows the business has become less efficient.

Moderna’s forward price-to-sales ratio is 5.8x. The market typically values companies like Moderna based on their anticipated profits for the next 12 months, but it expects the business to lose money. We also think the upside isn’t great compared to the potential downside here - there are more exciting stocks to buy.

Wall Street analysts have a consensus one-year price target of $37.32 on the company (compared to the current share price of $24.67).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.