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Moderna posted a loss for the third quarter as demand for its Covid shots declined. 
Still, Moderna’s total revenue for the period topped Wall Street’s expectations. 
Moderna will hold an earnings call with investors at 8:00 a.m. ET.

Moderna on Thursday posted a steep loss for the third quarter as it recorded a large write-down due to unused doses of its Covid vaccine, its only marketable product, and unveiled plans to scale back production of the shot. 
Moderna’s total revenue for the period topped Wall Street’s expectations, even amid plummeting demand for its shot. Its outlook for next year, however, came in lower than what analysts were projecting.

Here’s what Moderna reported for the third quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

Loss per share: $9.53. That may not be comparable to the $1.93 per share expected by analysts. 
Revenue: $1.83 billion vs. $1.40 billion expected

Shares of Moderna fell more than 15% in premarket trading Thursday. Moderna’s stock is down more than 57% for the year as of Wednesday’s close, putting the biotech company’s market value at roughly $29 billion.
Moderna posted a net loss of $3.63 billion, or $9.53 per share, for the quarter. That compares with net income of $1.04 billion, or $2.53 per share, reported during the year-ago period. 
The company said the loss was primarily driven by $3.1 billion in mostly non-cash charges related to tax allowances and changing its manufacturing footprint. The resizing, which resulted in $1.4 billion in charges during the third quarter, aims to make the company’s Covid vaccine profitable in 2024 and beyond, Moderna CEO Stéphane Bancel said in a statement. 
The effort involves reducing manufacturing capacity and commitments with several third-party vendors and cutting back on purchase commitments for raw materials for products, Moderna CFO Jamey Mock said during an earnings call Thursday.

“During the pandemic, we were obsessed about scaling up manufacturing to make as many doses as we could to help as many people as we could. And now that we’re moving into an endemic setting, it is important to resize the company,” Bancel said on CNBC’s “Squawk Box” on Thursday.
Cost of sales for the quarter came in at $2.2 billion. That included a $1.3 billion charge for vaccines that have exceeded their shelf life and a contract manufacturing wind-down cost of $500 million, among other costs.
The biotech company generated third-quarter sales of $1.83 billion, with sales of its Covid shot dropping 44% from the same period a year ago. Total revenue plummeted from the $3.36 billion Moderna recorded in the third quarter of 2022, when Covid cases still trended higher in the U.S. 
Moderna reiterated its current full-year outlook of at least $6 billion in Covid vaccine sales, but did not provide a range for that forecast. In August, Moderna said it expected its shot to rake in $6 billion to $8 billion in revenue in 2023. 

Covid vaccine questions

Nikos Pekiaridis | Lightrocket | Getty Images

The company said its guidance assumes Covid vaccine trends will be consistent with last fall, but noted that U.S. vaccination rates are still the “largest remaining variable to sales for the year.” 
“We believe that this season seems to be – and we have to be careful with December – but seems to be on track with last year. A little bit ahead of last year if you look at the weekly data,” Bancel told CNBC.
Notably, Moderna said its Covid vaccine has won 45% of the U.S. market share so far this fall, up from the 36% market share it captured in 2022.
Bancel added that company expects the U.S. market for Covid shots to be at least 50 million doses this fall, which is consistent with last year and is “something we repeat again in 2024.”
“Our assumption is everyone who has gotten their booster in 2023 will at least get their booster also in 2024 and beyond,” Moderna CCO Arpa Garay said during the earnings call. Garay added that the company expects to see “some increase in the overall Covid market” as patients become more understanding of annual vaccine recommendations.
Moderna expects roughly $4 billion in sales in 2024, mostly in the second half of the year, mainly due to global Covid shot sales and the launch of its vaccine against respiratory syncytial virus, or RSV. Wall Street analysts had expected $6 billion next year.
Mock said the company expects 2024 sales to be the “low point” for the company. Moderna expects to return to organic sales growth by 2025.
Moderna and its rivals Pfizer and Novavax have all seen sales of their Covid-related products plummet as much of the world moves on from the pandemic and depends less on protective vaccines and treatments. 
Moderna is hoping to shift investor focus away from Covid toward a pipeline of new vaccines. The company is developing shots targeting other respiratory diseases and has said it hopes to offer a slew of new jabs targeting cancer, heart disease and other conditions by 2030.
“We’re talking up to 15 products in the next five years and quite a number of them in ’24 and ’25,” Bancel told CNBC. “That’s how we drive growth again, the products.”
The lineup includes Moderna’s experimental vaccine against respiratory syncytial virus, or RSV. The company in July filed for full approval of the shot for adults ages 60 and older and expects a decision from regulators in 2024. 
Moderna is also hoping to win approval for its combination vaccine targeting Covid and the flu in 2025. That shot recently showed positive initial results in a mid-stage clinical trial and is expected to deliver greater convenience to patients and health care providers.  
The pipeline also includes Moderna’s personalized cancer vaccine, a highly anticipated shot being developed with Merck to target different tumor types, along with a flu vaccine.  More

Eli Lilly reported third-quarter revenue and adjusted earnings that topped expectations, lifted by $1.4 billion in sales from its blockbuster diabetes drug Mounjaro. 
But the company slashed its full-year profit guidance due to charges primarily related to its recent acquisitions.

Eli Lilly and Company, Pharmaceutical company headquarters in Alcobendas, Madrid, Spain.
Cristina Arias | Cover | Getty Images

Eli Lilly on Thursday reported third-quarter revenue and adjusted earnings that topped estimates on strong demand for its diabetes drug Mounjaro, but slashed its full-year profit guidance due to charges primarily related to its recent acquisitions.
Here’s what Eli Lilly reported for the third quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

Earnings per share: 10 cents per share adjusted vs. 13 cents loss per share expected
Revenue: $9.50 billion vs. $8.95 billion expected

For the quarter ended Sept. 30, Eli Lilly posted a loss of $57.4 million, or 6 cents a share, compared with a profit of $1.45 billion, or $1.61 a share, a year earlier. Excluding one-time items, the company posted a per-share profit of 10 cents.
The pharmaceutical giant generated third-quarter revenue of $9.50 billion, up 37% from the same period a year ago. That increase was primarily driven by growth from Mounjaro and other treatments, including breast cancer pill Verzenio and diabetes medication Jardiance, and the sale of one of its drug portfolios.
Eli Lilly recorded pretax “in-process research and development” charges of $2.98 billion, which are primarily related to a slew of recent buyouts, including Dice Therapeutics, Versanis Bio and Emergence Therapeutics. That compares with charges of $62.4 million in the third quarter of 2022.
“This is essentially the future value of business development deals we have done,” Eli Lilly CEO David Ricks said Thursday on CNBC’s “Squawk Box.”
The company lowered its 2023 adjusted earnings guidance to a range of $6.50 to $6.70, from a previous range of $9.70 to $9.90 per share.

But Eli Lilly reiterated its full-year revenue forecast of between $33.4 billion and $33.9 billion. 
Shares of Eli Lilly rose more than 1% in premarket trading Thursday.
With a market cap of roughly $526 billion, Eli Lilly is the largest pharmaceutical company based in the U.S. The company’s stock has been on a tear this year, with shares up nearly 52% through Wednesday’s close. 

Mounjaro, other drugs

Mounjaro, the company’s Type 2 diabetes injection, posted $1.41 billion in sales for the quarter. The drug was first approved in the U.S. in May 2022 and had just $97.3 million in sales in the year-ago period. 
Analysts had expected the drug to bring in $1.28 billion in worldwide sales, according to estimates compiled by FactSet.
The lion’s share of Mounjaro revenue came from the U.S., where it raked in $1.28 billion, reflecting increased demand and higher realized prices due to decreased use of savings card programs.
Eli Lilly noted that it experienced “intermittent delays” fulfilling orders of certain Mounjaro doses due to significant demand, which negatively affected volume.

More CNBC health coverage

Investors have pinned high hopes on Mounjaro’s potential mega-blockbuster potential beyond diabetes, with initial studies suggesting that it may be even more effective at reducing weight than Novo Nordisk’s popular Wegovy and Ozempic injections. Last month, Eli Lilly filed for Food and Drug Administration approval of the injection for chronic weight management.
Ricks told CNBC that the company expects the FDA to make a decision in the fourth quarter.
Revenue growth was also driven by sales of breast cancer pill Verzenio, which rose 68% to $1.04 billion for the quarter. Sales of Jardiance, a tablet that lowers blood sugar in Type 2 diabetes patients, climbed 22% to $700 million for the third quarter.
Eli Lilly also sold the rights to its olanzapine drug portfolio during the quarter, which brought in $1.42 billion. Olanzapine, marketed under the brand name Zyprexa, treats psychotic conditions like schizophrenia and bipolar disorder.
Meanwhile, the company’s other diabetes medicine, Trulicity, had $1.67 billion in revenue, down 10% from the same period a year go.
The company also reported no sales from its Covid antibody treatments, compared with $387 million in the second quarter of 2022. The Food and Drug Administration rescinded its approval of the company’s antibody bebtelovimab in November.
Notably, Eli Lilly said it now expects the FDA to make a decision on whether to approve its Alzheimer’s treatment, donanemab, in the first quarter of 2024. The company in July applied for full approval of the drug and previously said it expected the agency to decide by the end of the year.
Ricks said the FDA asked for a short extension to its review period to “get through all the data,” so the company isn’t concerned about a later decision date.
“It is more about the procedures taking a little longer from their end,” Ricks told CNBC. More

Join us for Evolve Global Summit: Accelerated Transformation on November 2, 2023. Register here for this virtual event.

Target CEO Brian Cornell described aggressive behavior and serious safety threats that employees faced because of the company’s Pride month collection.
Cornell said he decided to pull some of the controversial merchandise, even though he knew that would also get a strong reaction.
The discounter has had a Pride month collection for over a decade.

Target CEO Brian Cornell defended his decision to pull some of the retailer’s Pride Collection merchandise off shelves earlier this year, saying backlash against the items led to the most serious safety threats that he can recall in his decade with the company.
In an interview aired on “Squawk Box” Thursday morning with CNBC’s Becky Quick, Cornell said employees dealt with “very aggressive behavior” in stores, including threats, destruction of merchandise and disruptions at the cashier area. He said some people yelled at employees and “threatened to light product on fire” in stores.

“I’ve seen natural disasters,” Cornell said. “We’ve seen the impact of Covid leading into the pandemic. Some of the violence that took place after George Floyd’s murder. But I will tell you, Becky, what I saw back in May is the first time since I’ve been in this job where I had store team members saying, ‘It’s not safe to come to work.'”
Target has sold merchandise timed for Pride month, which celebrates LGBTQ+ people and issues in June, for more than a decade. Yet the Minneapolis-based discounter faced sharp backlash this year to items in the collection, which included swimsuits and other items for transgender customers.
The response coincided with laws across the country that restrict medical care, bathroom access and more for transgender Americans and set guidelines for the social issues that children learn about in certain classrooms.
In August, Cornell said the strong reaction to the company’s Pride collection contributed to Target’s disappointing sales in the second quarter.
Beverage giant AB InBev earlier this year faced similar backlash around its Bud Light beer brand after a partnership with transgender influencer Dylan Mulvaney and subsequent decision not to defend the endorsement. A boycott of the beer has continued to hurt sales, the company said earlier this week.

Cornell said in the CNBC interview he thinks the Pride response is no longer hurting Target financially, though he noted the retailer faces other challenges. Consumers are spending less, even on groceries, he said.
Target will report its fiscal third-quarter earnings on Nov. 15.
Cornell said he made the call to remove the controversial merchandise, despite knowing it would create even more of a reaction.
“We had to prioritize the safety of our teams,” he said. “And I knew personally this was not gonna be well received. But we had to prioritize the safety of the team.”
Cornell’s full interview with CNBC will air later Thursday as part of CNBC Evolve. More

Starbucks’ quarterly earnings and revenue beat Wall Street’s estimates.
The company’s same-store sales rose 8%, fueled by higher average checks and a 3% increase in customer traffic to its cafes.
The coffee giant’s U.S. locations outperformed analysts’ expectations.

A Starbucks logo at a location in New York, Aug. 17, 2023.
Gabby Jones | Bloomberg | Getty Images

Starbucks on Thursday reported quarterly earnings and revenue that topped analysts’ expectations, fueled by strong U.S. demand for pricier drinks.
Shares of the company rose 10% in premarket trading.

Here’s what Starbucks reported for its fiscal fourth quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

Earnings per share: $1.06 vs. 97 cents expected
Revenue: $9.37 billion vs. $9.29 billion expected

The coffee giant reported net income attributable to the company for the quarter ended Oct. 1 of $1.22 billion, or $1.06 per share, up from $878.3 million, or 76 cents per share, a year earlier.
Net sales climbed 11.4% to $9.37 billion.
The company’s same-store sales rose 8%, fueled by higher average checks and a 3% increase in customer traffic to its cafes. Analysts surveyed by StreetAccount were expecting same-store sales growth of 6.8%, but the company’s domestic locations outperformed.
Starbucks launched its fall menu, including the pumpkin cream cold brew and iconic pumpkin spice latte, in late August. With a legion of dedicated fans, those drinks typically drive customers to its locations while they are available.

“We had a remarkable fall launch that led to record-breaking average weekly sales,” CEO Laxman Narasimhan told analysts on the company’s conference call.
U.S. and North American same-store sales grew 8%. The average check in Starbucks’ home market rose 6%, while traffic ticked up 2%.
Outside North America, same-store sales increased 5%, driven entirely by more customer visits.
And in China, Starbucks’ second-largest market, same-store sales rose 5%. Customer traffic increased 8%, but the average ticket fell 3%.
“We feel good about the overall returns that we’re getting there, and I’m heartened by how the business is coming together, despite all the headwinds that have been there for the last couple of years,” Narasimhan told analysts.
A year ago, same-store sales in China plunged 16%, hurt by the Chinese government’s long-held zero Covid policy, which hamstrung traffic. China rolled back that policy several months later, but Starbucks’ cafes there faced an uneven recovery. Investor fears about the market have weighed on the stock in recent months.
Looking to fiscal 2024, Starbucks expects same-store sales growth of 5% to 7%, down from its long-term forecast of 7% to 9% same-store sales growth.
CFO Rachel Ruggeri said on the call that the outlook for same-store sales reflects a “healthy, as well as achievable, comp guidance.”
But the rest of the company’s outlook fell within its previously stated long-term targets. For example, the company’s revenue forecast of 10% to 12% matches its prior guidance, although Ruggeri said net sales will likely come in on the lower end of that range.
Starbucks also maintained its earnings per share growth forecast of 15% to 20%.
The company is forecasting that it will increase its global footprint by 7% in fiscal 2024. Its U.S. footprint is expected to grow 4%, while China’s will climb 13%.
Starbucks projects that China will report same-store sales growth of 4% to 6% during the last three quarters of the fiscal year.
The company’s outlook doesn’t include any impact from currency exchange rates.
Starbucks will also be giving an update on its “reinvention” strategy to investors on Thursday afternoon in New York City. More

Join us for Evolve Global Summit: Accelerated Transformation on November 2, 2023. Register here for this virtual event.

Target is doubling down on its cautious outlook as it prepares for the holiday shopping season.
CEO Brian Cornell told CNBC that shoppers are pulling back on spending, even on groceries.
Target is taking a more conservative approach to inventory after last year’s glut weighed on profit.

Target CEO Brian Cornell says shoppers are pulling back, even on groceries, as they feel stressed about their budgets.
In an interview with CNBC’s Becky Quick that aired Thursday morning, he emphasized that the retailer has posted seven consecutive quarters of declining sales of discretionary items, such as apparel and toys, in terms of both dollars and units.

“But even in food and beverage categories, over the last few quarters, the units, the number of items they’re buying, has been declining,” he said in the interview.
With the comments, Target doubled down on a cautious outlook, as it gears up for the crucial holiday season. The retailer cut its full-year sales and profit expectations in August, despite a growing number of economists delaying or scrapping calls for a recession and government data showing that inflation is cooling.
The company will report earnings on Nov. 15.
Cornell said the company has faced a turnabout from previous holiday seasons. During the height of the pandemic, it didn’t have enough merchandise because of pandemic-related supply chain bottlenecks. Then, a year ago, it coped with too much of the wrong inventory.
“We’ve taken a much more conservative approach in planning inventory this year,” he said. “But we’re gonna lean into those big seasonal moments and play to win, when we know the consumer is looking for something that’s new, looking for affordability, looking for that special item for the holiday season.”

Over the past few years, Cornell said shoppers have typically sprung for more purchases during “seasonal moments” such as Halloween or Mother’s Day — a factor that could help in the coming months.
Cornell’s full interview with CNBC will air later Thursday as part of CNBC Evolve. More

Peloton’s sales during its fiscal first quarter were higher than expected but its losses underperformed Wall Street’s expectations.
The connected fitness company, known for its pricy Bike and Bike+, is struggling to convert new users to its paid subscription.
For its holiday quarter, Peloton is expecting revenue of between $715 million and $750 million, an 8% drop at the midpoint compared to the year-ago period.

A Peloton Bike inside a showroom in New York, US, on Wednesday, Nov. 1, 2023. Peloton Interactive Inc. is scheduled to release earnings figures on November 2.
Michael Nagle | Bloomberg | Getty Images

Shares of Peloton sank about 6% in premarket trading Thursday after the company reported a wider-than-expected quarterly loss, a tepid holiday forecast and “bad news” for paid subscriptions.
Here’s how the connected fitness company did in its first fiscal quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG, formerly known as Refinitiv:

Loss per share: 44 cents vs. 34 cents expected
Revenue: $595.5 million vs. $591 million expected

The company’s reported net loss for the three-month period that ended Sept. 30 was $159.3 million, or 44 cents per share, compared with a loss of $408.5 million, or $1.20 per share, a year earlier.
Sales dropped to $595.5 million, down from $616.5 million a year earlier.
Once again, revenue from Peloton’s subscriptions — at $415 million — far outpaced sales of its hardware — $180.6 million — which has been an ongoing trend at the company.
For its holiday quarter, Peloton is expecting revenue of between $715 million and $750 million, an 8% drop at the midpoint compared to the year-ago period. That falls short of the $763.2 million analysts had expected for the company’s fiscal second quarter, according to LSEG.
It expects paid connected fitness subscriptions to be between 2.97 million and 2.98 million, which falls short of the 3.03 million that analysts had expected, according to StreetAccount. It’s forecasting paid app subscriptions to be between 660,000 and 680,000, representing a 21% year-over-year drop off and 12% sequential churn. That’s below the 780,400 subscribers analysts had expected, according to StreetAccount.

For the full year, Peloton expects paid app subscriptions to drop 6% to between 700,000 and 850,000 and revenue to fall 2% to $2.7 billion to $2.8 billion. Analysts were expecting full-year revenue to be in line with Peloton’s projections at $2.79 billion, according to LSEG.

Spinning wheels

Peloton has been working to launch a series of new strategies in its quest to reclaim its pandemic-era heyday but so far, the results have been mixed.
One bright spot has been its rental service, also known as fitness as a service, which CEO Barry McCarthy called a “big growth opportunity” in a letter to shareholders. Peloton ended the quarter with 54,000 rental subscribers in the U.S. and Canada and expects to end the year with 75,000 subscriptions. During the quarter, rentals represented 33% of bike sales.
Still, the company is seeing higher-than-expected membership churn once again. It ended the quarter with 2.96 million connected fitness subscriptions, below the 2.99 million that analysts had expected, according to StreetAccount and a drop off of about 30,000 memberships compared to the prior quarter. Churn came in at 1.5%, which has higher than the company’s projections and the 1.35% churn rate that analysts had expected.
Earlier this year, Peloton launched a new tiered pricing strategy for its app — a key part of its growth strategy — that included a free tier. The idea was users would fall in love with Peloton’s content and spring for a paid membership, which comes with a far wider variety of classes, but that bet is yet to materialize.
“With limited marketing support, we saw more than one million consumers download the free version of our App. Our brand relaunch was successful in continuing to resonate with our core demographic, and it also attracted more male, GenZ, Black, and LatinX groups than before the relaunch. That’s the good news,” McCarthy said in a letter to shareholders.
“The bad news is we were less successful at engaging and retaining free users and converting them to paying memberships than we expected.”
In response, the company shifted its marketing spend to focus on the company’s paid offering, which drove a higher mix of premium priced subscribers than it expected. Second, it worked to improve the user experience to make it easier to find classes.
It ended the quarter with 763,000 paying Peloton app subscribers, 65,000 fewer than the prior quarter. Churn for its paid app subscription came in at 6.3%, lower than what the company had expected. Analysts had expected 768,200 app subscribers, according to StreetAccount.
Users of Peloton’s app are engaging with it and taking longer classes and more class types than they were a year ago. Engagement, measured by time spent on the platform, was up 6% during the quarter.

Activating the core

In late September, the company announced a five-year partnership with former rival Lululemon that brought Peloton’s prized fitness content to the apparel retailer’s exercise app. The partnership marked the first time that Peloton was willing to share its content with another company as it looks to woo Lululemon’s 13 million members and convince them to sign up for its subscriptions. 
The day before announcing its partnership with Lululemon, Peloton revealed that it was parting ways with its chief product officer and co-founder Tom Cortese, who helped start the company alongside ousted founder John Foley. With Cortese’s departure, just two executives from Peloton’s early days remain in its C-suite: Jennifer Cotter, the company’s chief content officer, and Dion Camp Sanders, its chief emerging business officer.
A few weeks later, the company announced a multi-year partnership with the NBA and WNBA, which agreed to name Peloton as an official fitness partner of the sports leagues. As part of the partnership, NBA league pass – the league’s live game subscription service – will be available to stream across Peloton devices. The company also has plans to develop NBA- and WNBA-themed fitness classes. 
When it comes to hardware, Peloton is now selling its Row machine in Canada and its Bike and Bike+ in Austria, its fifth market outside of the U.S., as it looks to boost sales of its connected fitness products, which have been on the decline. 
All of the strategies are part of McCarthy’s goal to return the company to growth and boost membership so it can eventually find a path to profitability. During the previous quarter, Peloton saw higher than expected churn that the company suspects was related to the recall of its Bike seat post, along with seasonality. 
The post, which had a tendency to detach and break unexpectedly during use and left some riders injured, was recalled in May and impacted more than 2 million bikes. During the previous quarter, the recall cost the company $40 million, far more than it had expected. More