Is Moderna's Cheaper Valuation A Buying Signal?

Is Modernas Cheaper Valuation A Buying Signal?

Moderna (NASDAQ: MRNA) has been in the news recently, with the therapeutic goods administration approving the company's vaccines for children. This news, along with the stock’s historically low P/E ratio of 4.64 at the time of writing, has caught the attention of investors. MarketBeat recently reported that Moderna is one of the least expensive stocks in the S&P 500 through valuation alone and has a strong projected EPS. This article will cover other aspects of this stock to see if its improved valuation makes the company a buy.

Positive Fundamentals of Moderna

Moderna's FWD P/E ratio is 78.77% cheaper than companies in the sector median at 5.81 compared with 27.38. Moderna is also less expensive than its sector on numerous other ratios, including its FWD Price / Sales ratio at 2.85 compared to 4.70 for the sector. However, one area where the company comes up short is its Price / Book ratio, which stands at 3.70 compared to 2.18. This means that the company is trading at a relatively higher valuation than its book value compared to its peers.

Moderna also has excellent profitability. The company has an EBITDA margin of 73.24%, compared with the sector median of 4.34%. Excellent profitability also comes with the effect of generating a large amount of cash. The company has a TTM cash from operations of 13.41B compared with the sector median of -22M. 

Finally, there's the mixed but generally positive analyst revisions for the company's EPS and revenue forecasts. The company received 10 EPS up revisions and 3 down revisions. Moderna also received 6 up revisions for its revenue and 7 down revisions.

Analysts Split on Moderna

Despite the company's strong performance, Wall St considers Moderna a buy - but just barely. Over the last 90 days, 19 analysts gave their ratings for the stock. 10 analysts rated the stock as a hold, while 4 rated it as a strong buy and 4 as simply a buy. Only one analyst gave the stock the rating of a sell.

Part of the reason for the mixed consensus on the stock may be that the company has underperformed the market over the last year. Moderna's 12-month performance is below the S&P 500's at a -51.90% loss compared to -8.58% for the index. Over the last three years, Moderna clearly beat the index delivering a 1,019.12% return compared to 32.97%.

Moderna Vs BioNTech SE

BioNTech SE (NASDAQ: BNTX)  is a smaller biotech stock but still a similar size to Moderna and therefore warrants a comparison. The company's market cap is 37.88B compared with Moderna's 62.85B. The effect of the company having a smaller market cap is that BTNX has the potential for its shares to rise higher and faster than Moderna.

Both MRNA and BTNX have struggled this year in terms of delivering value back to shareholders. The YTD return for Moderna stands at -37.78%, and BTNX has a negative return of -39.53%. This value sell-off is reflected in the companies' valuation ratios. MRNA is slightly more expensive than BNTX, with an FWD P/E ratio of 5.81 compared with 4.22.

The two companies are evenly matched when it comes to projected growth numbers. MRNA's FWD revenue growth is 130.13%, while BNTX stands at 156.98%.

Data & News supplied by
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.