Moderna Inc (MRNA, Financial) has experienced a notable daily gain of 4.09%, yet over a three-month period, it shows a loss of -5.1%. With a Loss Per Share of 9.35, investors may question if the stock is significantly overvalued. This article delves into Moderna's valuation, analyzing whether its current market price truly reflects its worth.
Company Introduction
Moderna is a commercial-stage biotech that has made significant strides since its founding in 2010. The company's mRNA technology gained rapid validation with its COVID-19 vaccine, authorized in the United States in December 2020. With 39 mRNA development candidates in clinical trials as of mid-2023, Moderna is tackling a broad spectrum of therapeutic areas. Despite its current stock price of $94.89 and a market cap of $36.20 billion, a closer examination of its GF Value suggests a different story about its fair valuation.
Summarize GF Value
The GF Value is a unique measure that estimates the intrinsic value of a stock, taking into account historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. Moderna (MRNA, Financial)'s stock appears significantly overvalued when compared to the GF Value Line, which suggests a fair value of $68.65, well below its current trading price. This discrepancy indicates that Moderna's stock may not deliver returns commensurate with its business growth over the long term.
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Financial Strength
Assessing the financial strength of a company is crucial before investing. Moderna's cash-to-debt ratio of 5.21 falls below the industry median, yet its overall financial strength is robust with a score of 8 out of 10. This suggests that while there are risks associated with its debt levels, Moderna's financial position remains strong.
Profitability and Growth
Investing in profitable companies is generally less risky, particularly those with a track record of consistent profitability. Moderna has been profitable for 2 of the past 10 years, with a recent revenue of $9.10 billion but a Loss Per Share of $9.35. Its operating margin stands at -29.32%, which is competitive within the biotechnology industry. However, Moderna's overall profitability rank is low, reflecting poor profitability.
Growth is a critical factor in valuation, and Moderna's 3-year average annual revenue growth rate of 578.9% is impressive. Despite this, its EBITDA growth rate is not as promising, which may impact long-term shareholder value.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) with its Weighted Average Cost of Capital (WACC) can reveal its profitability and value creation potential. Moderna's ROIC of -28.71 is significantly below its WACC of 11.14, indicating that the company may not be generating sufficient returns on its investments.
Conclusion
In conclusion, Moderna (MRNA, Financial) presents as significantly overvalued when considering its GF Value. Despite a strong financial condition, its profitability is poor, and its growth rates present a mixed picture. Investors interested in Moderna's financials can explore its 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.
