Today, Moderna Inc (MRNA, Financial) experienced a stock price decline of 3.43%, yet it has seen a significant three-month gain of 28.21%. Despite these fluctuations, a critical question arises: is the stock significantly overvalued? With a current Loss Per Share standing at 15.67, this analysis seeks to delve deep into Moderna's valuation, encouraging investors to scrutinize the following insights.
Company Introduction
Moderna, a commercial-stage biotech founded in 2010 and publicly traded since December 2018, swiftly validated its mRNA technology with the release of its COVID-19 vaccine in December 2020. As of mid-2023, the company had 39 mRNA development candidates in clinical trials, covering a broad spectrum of therapeutic areas such as infectious diseases, oncology, cardiovascular disease, and rare genetic diseases. With a current stock price of $120.71, Moderna (MRNA, Financial) boasts a market capitalization of $46.30 billion. However, a comparison with the GF Value, which estimates the fair value at $50.01, suggests a significant overvaluation.
Understanding the GF Value
The GF Value is a unique measure calculated based on historical trading multiples, a GuruFocus adjustment factor from past returns and growth, and future business performance estimates. This value serves as a benchmark for fair trading. When a stock price significantly exceeds the GF Value line, it indicates an overvaluation, predicting poorer future returns. Conversely, prices well below this line could lead to higher future returns. Currently, Moderna's market price substantially exceeds its GF Value, classifying it as significantly overvalued and suggesting potential lower future returns.
Financial Strength and Stability
Assessing a company's financial strength is crucial to avoiding capital loss. Moderna's cash-to-debt ratio stands at 6.89, which is commendable compared to 50.49% of companies in the Biotechnology industry. This ratio, along with a fair financial strength rating of 7 out of 10, suggests that Moderna is in a relatively stable financial position.
Profitability and Growth Prospects
Despite its innovative edge, Moderna's profitability is ranked at a low 3 out of 10, with an operating margin of -101.1%, which is concerning. However, the company has shown impressive revenue growth, with an average annual increase of 190.8% over the past three years, outperforming 95.9% of its industry peers. This growth, however, is shadowed by a 3-year average EBITDA growth rate of -64.8%, placing it lower than 92.85% of companies in the Biotechnology sector.
Investment Considerations: ROIC vs. WACC
Another critical financial metric is the comparison between Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC). Moderna's ROIC is -58.09, significantly lower than its WACC of 13.11, indicating inefficiency in generating cash flow relative to the capital invested.
Conclusion
In conclusion, Moderna (MRNA, Financial) appears significantly overvalued when considering its current market price against the GF Value. The company's financial health is stable, yet its profitability and growth metrics suggest potential challenges ahead. Investors should weigh these factors carefully. For a deeper understanding of Moderna's financials, visit the 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
