Moderna Inc (MRNA, Financial) has experienced a daily loss of 1.02% and a significant 3-month decline of 30.56%. With a Loss Per Share standing at $9.35, investors are questioning whether the stock is fairly valued. This article delves into the valuation of Moderna, aiming to shed light on its current market position and future prospects. We encourage readers to explore the following analysis for an informed perspective on Moderna's intrinsic value.
Moderna Inc (MRNA, Financial) is a commercial-stage biotech firm established in 2010, which went public in December 2018. The company's mRNA technology gained rapid validation with its COVID-19 vaccine, authorized in the US in December 2020. As of mid-2023, Moderna had 39 mRNA development candidates in clinical trials, covering infectious disease, oncology, cardiovascular disease, and rare genetic diseases. With a current stock price of $77.72 and a Fair Value (GF Value) of $75.55, we are set to explore the depths of Moderna's market value, juxtaposing it against the company's financials and the GF Value estimation of fair value.
Understanding the GF Value
The GF Value is a unique measure of a stock's intrinsic value, calculated using historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and estimates of future business performance. This valuation tool provides investors with a benchmark for fair trading value. When a stock's price significantly exceeds the GF Value Line, it may be overvalued, suggesting poorer future returns. Conversely, a price well below the GF Value Line could signal undervaluation and the potential for higher returns. Moderna (MRNA, Financial) appears to be fairly valued according to the GF Value, with its price hovering around the estimated fair value, suggesting that its long-term return may align with the company's business growth rate.
Discover companies that may offer higher future returns at reduced risk: High Quality & Low Capex Screener.
Assessing Moderna's Financial Strength
Investing in companies with robust financial strength is crucial to minimize the risk of capital loss. Moderna's financial strength can be partially gauged by its cash-to-debt ratio of 5.21, placing it below 54.97% of its peers in the Biotechnology industry. Despite this, GuruFocus ranks Moderna's overall financial strength at 7 out of 10, indicating a fair financial position.
Evaluating Profitability and Growth
Profitable companies, particularly those with consistent profitability, are generally safer investments. Moderna has been profitable for 2 out of the past 10 years. With a 12-month revenue of $9.10 billion and a Loss Per Share of $9.35, its operating margin is -29.32%, ranking above 66.42% of its industry counterparts. However, the overall profitability rank for Moderna is a low 3 out of 10, indicating poor profitability. In terms of growth, Moderna's 3-year average revenue growth rate is among the top of its industry, but its EBITDA growth rate is not measurable, which is concerning.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) offers insight into its value creation. Moderna's ROIC of -28.71 is less than its WACC of 19.04, indicating that the company is not currently generating value for shareholders. This comparison is an essential part of assessing Moderna's profitability.
In conclusion, Moderna (MRNA, Financial) appears to be fairly valued, with a fair financial condition and poor profitability. Its growth ranks unfavorably compared to peers in the Biotechnology industry. For a more detailed look at Moderna's financials, interested investors can view its 30-Year Financials here.
To discover high-quality companies that may deliver above-average returns, please visit the GuruFocus High Quality Low Capex Screener.
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.