Moderna Inc (MRNA, Financial) recently experienced a significant daily loss of 7.74%, yet it boasts a 3-month gain of 72.72%. Despite these fluctuations, a critical look at its Loss Per Share of 15.67 raises the question: Is the stock significantly overvalued? This analysis aims to explore Moderna's valuation in depth, urging readers to consider whether its current market price justifies its intrinsic value and future business performance.
Company Overview
Founded in 2010 and going public in December 2018, Moderna is a commercial-stage biotech leader that leveraged its mRNA technology to develop a COVID-19 vaccine authorized in the United States in December 2020. As of mid-2023, the company had 39 mRNA development candidates in clinical trials, spanning infectious disease, oncology, cardiovascular disease, and rare genetic diseases. Despite its groundbreaking scientific contributions, a stark comparison between its current stock price of $153.71 and the GF Value of $49 suggests that Moderna (MRNA, Financial) might be significantly overvalued.
Understanding GF Value
The GF Value is a proprietary measure reflecting the intrinsic value of a stock, calculated from historical trading multiples, a GuruFocus adjustment factor based on past returns and growth, and future business performance estimates. This benchmark suggests that if Moderna's stock price significantly exceeds the GF Value, the stock is likely overvalued, predicting poor future returns. Conversely, trading below the GF Value could indicate potential for higher returns. Currently, Moderna's market cap stands at $58.90 billion, with a GF Value significantly lower, pointing towards an overvaluation.
Given this valuation, the long-term return of Moderna's stock is likely to be much lower than its future business growth could suggest.
Financial Strength and Stability
Investing in companies like Moderna, which show poor financial strength, carries a higher risk of permanent capital loss. Therefore, assessing metrics such as the cash-to-debt ratio, which for Moderna stands at 6.89, provides insights into financial health. This ratio is better than 50% of peers in the Biotechnology industry, and GuruFocus ranks Moderna's overall financial strength at 8 out of 10, indicating robustness despite the industry's inherent risks.
Profitability and Growth Metrics
Moderna's profitability and growth are pivotal in evaluating its stock. Despite a high revenue of $5.10 billion over the past twelve months, its operating margin stands at -101.1%, indicating significant losses. Furthermore, the company's growth trajectory, with a 190.8% average annual revenue increase, contrasts sharply with a 3-year average EBITDA growth rate of -64.8%, reflecting volatility and potential sustainability issues in its business model.
ROIC vs. WACC Analysis
Another critical financial metric is the comparison between Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC). Moderna's ROIC over the past year was -58.09, significantly lower than its WACC of 13.15, suggesting that the company is not generating adequate returns relative to its capital costs.
Conclusion
In conclusion, Moderna (MRNA, Financial) appears significantly overvalued based on the GF Value assessment. While the company has strong financials, its profitability and growth metrics, coupled with a poor ROIC relative to WACC, suggest caution. Investors interested in deeper insights can explore Moderna's 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.
