Moderna Inc (MRNA, Financial) has recently shown a notable daily gain of 5.55%, with a three-month gain of 34.21%. Despite these impressive numbers, a deeper look into the company's financials reveals a Loss Per Share of 15.67. This analysis aims to determine whether Moderna's stock is significantly overvalued by examining its current market performance and intrinsic value.
Company Overview
Founded in 2010 and going public in December 2018, Moderna is a commercial-stage biotech leader that gained rapid validation with its COVID-19 vaccine authorized in the United States in December 2020. With 39 mRNA development candidates in clinical trials covering areas like infectious disease, oncology, and cardiovascular disease, Moderna is at the forefront of biotechnological innovation. Despite a current stock price of $123.82 and a market cap of $47.50 billion, the GF Value estimates Moderna's fair value at just $49.76, suggesting the stock might be significantly overvalued.
Understanding GF Value
The GF Value is a proprietary measure indicating the intrinsic value of a stock. It incorporates historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. When a stock's price significantly exceeds its GF Value, it suggests overvaluation, potentially leading to poor future returns. Conversely, a price well below the GF Value may indicate undervaluation and the possibility of better returns. Currently, Moderna's stock price significantly exceeds its GF Value, highlighting it as overvalued.
Financial Strength and Stability
Investing in companies with robust financial health is crucial to avoid potential capital loss. Moderna's cash-to-debt ratio of 6.89 ranks better than 50.49% of its peers in the biotechnology industry, earning it a strong financial strength rating from GuruFocus.
Profitability and Growth Metrics
Despite its innovative edge, Moderna's profitability is low, with an operating margin of -101.1%, ranking it better than only 55% of its industry peers. The company's growth has been impressive, with an average annual revenue growth rate of 190.8%, significantly outpacing 96.15% of competitors. However, its 3-year average EBITDA growth rate is -64.8%, which is concerning.
Investment Efficiency: ROIC vs. WACC
Comparing Return on Invested Capital (ROIC) to the Weighted Average Cost of Capital (WACC) helps gauge investment efficiency. Moderna's ROIC of -58.09 and a WACC of 13.1 suggest it is currently not creating shareholder value efficiently.
Conclusion
While Moderna Inc (MRNA, Financial) exhibits strong financial health and impressive growth, its current valuation far exceeds its intrinsic value as estimated by GF Value, indicating significant overvaluation. Potential investors should be cautious, considering the possible lower long-term returns. For more insights into Moderna's financials, visit 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.
