On Monday, HSBC has made adjustments to its perspective on Moderna (NASDAQ:) shares, shifting its rating from ‘Hold’ to ‘Reduce’, while also increasing the price target to $86 from the previous $75.

The financial institution provided updated revenue estimates following Moderna’s Q4 2023 results and adjusted the expected success rates of the company’s Investigational New Drug (IND) program.

HSBC has revised the probabilities of success for Moderna’s adjuvant melanoma and adjuvant NSCLC (non-small cell lung cancer) treatments. The new estimates are 50% for melanoma and 25% for NSCLC, with anticipated risk-adjusted peak sales reaching $2.4 billion by 2035, a significant rise from the prior estimate of $1.2 billion.

Despite these adjustments, HSBC maintains a cautious stance on the overall market potential for Moderna’s mRNA vaccine, projecting peak sales at $1.7 billion, which aligns with the lower end of the consensus range of $1.5 to $2.4 billion.

The updated analysis and price target from HSBC reflect the revised assumptions in their APV (adjusted present value) analysis. The firm anticipates that the transition phase for the COVID-19 vaccine will extend throughout 2024, suggesting that revenue uncertainties for Moderna may persist for some time. Additionally, HSBC notes that recent updates on the RSV vaccine data could pose further risks to Moderna’s near-term growth prospects.

HSBC’s new price target of $86, despite being an increase from the former target, still suggests a potential downside of 13.5%. This assessment has led to the downgrade of Moderna’s stock rating to ‘Reduce’ as the firm weighs the potential risks against the updated revenue and success rate projections.

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