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Moderna - Equity Analysis

Updated: May 20


Company Description

Moderna is a biotechnology company founded in 2010 and headquartered in Cambridge, Massachusetts. The company specializes in developing messenger RNA (mRNA) therapeutics and vaccines for a variety of diseases and conditions, including infectious diseases, rare diseases, blood cancer, and autoimmune diseases. Moderna's mRNA technology is designed to stimulate the body's immune system to produce a therapeutic response.

Moderna's technology enables the rapid development of mRNA-based therapies and vaccines that have proven important in the fight against the COVID-19 pandemic. The company's vaccine against COVID-19, based on mRNA technology, was approved for emergency use by the US FDA in December 2020 and has been shown to be effective in clinical trials.

In addition to the COVID-19 vaccine, Moderna has a pipeline of mRNA-based treatments and vaccines that are in various stages of development. The company's focus on mRNA technology has received substantial funding and investment from the pharmaceutical industry and investors.

Moderna's mission is to transform medicine by developing mRNA and vaccines. The company is committed to advancing the use of mRNA technology to bring new treatments to patients in need. With a team of experts and scientists, Moderna is well-positioned to be a leader in the development of mRNA-based therapies and vaccines.



In this section of the equity research report, we will conduct a comprehensive financial analysis of Moderna's past balance sheets and performance. By examining key financial metrics such as free cash flow, ratios, profitability, debt, and multiples, we will be able to gain valuable insights into the company's financial health and make informed predictions about its prospects. These insights will be critical in determining Moderna’s investment potential and providing a thorough evaluation of the company's financial performance.


Liquidity refers to the capacity of an asset to be readily converted into cash in order to fulfill immediate obligations or liabilities. Commonly utilized indicators of liquidity include the current ratio, quick ratio, and cash ratio. Ideally, a ratio exceeding one is regarded as favorable. The current ratio assesses a company's current assets (assets that can be converted into cash within a year) in relation to its current liabilities by dividing current assets by current liabilities. The quick ratio, which omits inventories and other relatively illiquid current assets, is computed by summing cash and cash equivalents, accounts receivable, and short-term investments, and then dividing this sum by current liabilities. The cash ratio represents the most conservative gauge of liquidity, focusing solely on cash and cash equivalents in relation to current liabilities. This ratio indicates a company's capability to settle short-term debts using available cash resources.

Moderna's liquidity analysis reveals interesting trends in its financial performance over the past four years. The current ratio showed a decrease from 7.9 in 2019 to 1.4 in 2020, further improving to 1.8 in 2021, and reaching 2.7 in 2022. This demonstrates Moderna's ability to cover short-term obligations and implies a positive liquidity position, especially considering that a ratio above 1 is generally desirable.

The quick ratio for Moderna has been volatile, starting at a high level of 17.4 in 2019, then decreasing to 1.77 in 2020 and 1.33 in 2021, before slightly recovering to 2 in 2022. While the ratios have been fluctuating, they have generally remained above 1, indicating that Moderna has sufficient liquid assets to cover immediate liabilities.

In terms of the cash ratio, Moderna experienced a decline from 1.6 in 2019 to 0.6 in 2020. However, there was a slight improvement to 0.75 in 2021, followed by a decline to 0.65 in 2022. Although the cash ratio is relatively lower compared to the current and quick ratios, it still suggests that Moderna possesses adequate cash and cash equivalents to meet short-term obligations, albeit at a lower level.

Analyzing Moderna's liquidity ratios, it can be inferred that the company has shown a positive trend in its ability to cover short-term liabilities, as reflected by the increasing current ratio. However, the fluctuating quick ratio and the relatively lower cash ratio indicate the need for careful management of liquid assets to ensure sufficient funds are available to address immediate obligations.


In order to assess the profitability of Moderna, we will analyze key financial indicators including Return on Equity (ROE), Return on Investment (ROI), Net profit margin, and Net revenue. These metrics will provide insights into the company's financial performance over the years.

Return on Equity (ROE): Measures the return generated by the company on the equity invested by its shareholders. It indicates how effectively the company utilizes shareholder equity to generate profits.

Moderna's ROE has shown significant fluctuations over the past five years. In 2019, the company had a negative ROE of -61.29%, indicating that it incurred losses relative to shareholder equity. The ROE improved in 2020 but remained negative at -37.36%. However, in 2021, the company experienced a positive turnaround with an ROE of 19.76%. The positive trend continued in 2022, where the ROE surged to 121.86%, indicating a substantial increase in profitability. In 2023, Moderna maintained a healthy ROE of 25.87%, demonstrating efficient utilization of shareholder equity to generate profits.

Return on Investment (ROI): Measures the return generated by the company on its total invested capital. It evaluates the efficiency of the company in utilizing its invested capital to generate profits.

Modern's ROI has also exhibited significant fluctuations during the analyzed period. In 2019, the company had a negative ROI of -180.38%, indicating a poor return on its invested capital. The ROI improved in 2020, although it remained negative at -74.11%. However, in 2021, Moderna experienced a positive turnaround with an ROI of 20.24%, indicating improved efficiency in utilizing its capital to generate profits. The positive trend continued in 2022, where the ROI skyrocketed to 130.42%, reflecting a substantial improvement in profitability. In 2023, Moderna maintained a strong ROI of 24.99%, indicating efficient utilization of invested capital to generate returns.

Net Profit Margin: Measures the percentage of revenue that remains as profit after deducting all expenses, including taxes and interest. It indicates the profitability of the company's operations.

The net profit margin for Moderna has shown significant variations throughout the analyzed period. In 2019, the company had a negative net profit margin of -373.77%, indicating substantial losses relative to revenue. The net profit margin improved in 2020 but remained negative at -971.15%. However, in 2021, Moderna achieved a positive turnaround with a net profit margin of 21.89%, indicating improved profitability. The positive trend continued in 2022, with a net profit margin of 64.77%, demonstrating significant profitability. In 2023, Moderna maintained a robust net profit margin of 31.77%, indicating effective cost management and increased profitability.

Net Revenue: Net revenue represents the total amount of revenue earned by the company from its sales or operations after deducting any deductions such as returns, discounts, and allowances.

Modern's net revenue has experienced significant fluctuations over the past five years. The company witnessed substantial growth in revenue from 2019 to 2020, with a remarkable increase of 1238.33%. This growth was largely driven by the Covid-19 pandemic and the demand for its mRNA-based COVID-19 vaccine. In 2021, Moderna continued its growth trajectory with revenue reaching $18.471B, representing a staggering increase of 2200.25%. The growth trend slowed down in 2022, but revenue still increased to $19.263B, reflecting a 4.29% rise. However, in the first quarter of 2023, Moderna's revenue experienced a decline of 69.3% year-over-year, amounting to $1.862B. The decline in revenue can be attributed to factors such as vaccine distribution and market dynamics.

In conclusion, Moderna has showcased a significant turnaround in profitability over the analyzed period. The company demonstrated improvements in key financial indicators such as ROE, ROI, net profit margin, and net revenue. The positive trends in profitability highlight Moderna's success in utilizing shareholder equity and invested capital efficiently, resulting in improved profitability and increased returns. However, it's important to note the significant fluctuations in net revenue, which can be influenced by external factors such as pandemic-related demands and market dynamics.

Stock Valuation

In this financial report, we will conduct a stock valuation analysis for Moderna Incorporated, a leading biotechnology company. Our valuation will be performed using the Discounted Cash Flow (DCF) model, which is a widely accepted approach for estimating the intrinsic value of a company. The DCF model utilizes projected future cash flows, discounted to their present value, to determine the present value of a company's assets.

To begin our analysis, we have considered the company's Weighted Average Cost of Capital (WACC), which represents the required rate of return that Moderna must achieve on its investments to satisfy its investors. After careful evaluation, we have determined that Moderna's WACC stands at 12.9%. This rate incorporates the cost of both debt and equity financing, as well as the risks associated with the company's operations.

In order to calculate the present value of Moderna, we have forecasted its future cash flows, considering factors such as revenue growth, operating expenses, capital expenditures, and taxes. These projected cash flows have been discounted back to their present value using the company's WACC of 12.9%.

Additionally, we have utilized two different methods to estimate the terminal value of Moderna. The first method, known as the perpetuity growth method, assumes that the company will grow its cash flows at a constant rate indefinitely. For this analysis, we have used a terminal growth rate of 2.5%. Applying this method, we have arrived at a stock price of $149.29.

The second method we employed is the EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) exit multiple method. This approach relies on comparable companies or industry standards to estimate a multiple of EBITDA that can be applied to the company being analyzed. In this case, we have used an exit multiple of 8.5x, which is a standard for holding companies. Based on this method, we have determined a stock price of $161.65.

Considering the results of our analysis, the stock valuation for Moderna using the perpetuity growth method yields a price of $149.29, while the EBITDA exit multiple method provides a stock price of $161.65. It is important to note that these valuation figures should be interpreted within the context of the company's specific circumstances, market conditions, and future prospects.

Discounted Cash Flow Analysis

Multiples Analysis

In conducting a multiple analysis for Moderna, we examined the EV/EBITDA ratio and the Price-to-Earnings (P/E) ratio, both widely employed by investors and analysts to evaluate a company's financial performance and valuation.

Moderna's EV/EBITDA ratio stands at approximately 7.77, indicating that investors value the company at approximately 7.77 times its EBITDA. To gain deeper insights into the company's valuation, it is imperative to compare this ratio with industry peers. Notably, the average EV/EBITDA ratio for the pharmaceutical sector is 12.34. In light of this industry benchmark, Moderna's EV/EBITDA ratio suggests a relatively lower valuation compared to its peers.

Turning to the P/E ratio, Moderna exhibits a ratio of approximately 10.96, implying that investors are willing to pay roughly 10.96 times the company's earnings per share (EPS) for its stock. To assess the company's valuation in a broader context, it is crucial to consider the average P/E ratio for the pharmaceutical sector, which stands at 29x. Consequently, the comparison reveals that Moderna's P/E ratio is relatively lower than the industry average, indicating a potentially more modest valuation in the eyes of investors.

Considering the provided multiples, Moderna's EV/EBITDA ratio of 7.77 and P/E ratio of 10.96 suggest a moderate valuation when juxtaposed with industry benchmarks. The lower EV/EBITDA ratio relative to the industry average indicates a relatively lower valuation, while the lower P/E ratio suggests a comparatively less expensive stock price per unit of earnings in relation to industry peers.

Piotroski Score

The Piotroski score is a widely used metric for evaluating a company's financial health and investment potential. It comprises three categories: profitability, leverage and liquidity, and operating efficiency. Let's analyze Moderna's financial report using these factors.

In terms of profitability, Moderna earns points for having a positive net income (+1), indicating profitability. It also receives points for positive return on assets (ROA) (+1), suggesting efficient asset utilization. Additionally, Moderna gains points for positive cash flow from operations (CFO) (+1), indicating strong cash flow generation. However, it does not receive any points for earnings quality (0), as cash from operations for the last year is less than the net income.

Moving on to leverage and liquidity, Moderna does not receive any points for the leverage ratio (0), indicating no significant improvement or deterioration in its long-term debt. It earns points for liquidity (+1), implying that the company has sufficient current assets to cover its short-term obligations. Further, Moderna receives one point for the change in shares outstanding (+1), suggesting that it did not issue common equity in the year.

Regarding operating efficiency, Moderna does not earn any points for the change in gross margin (0), indicating that it has not experienced any notable improvement or decline compared to the industry standard. Similarly, there are no points awarded for the change in asset turnover (0), suggesting that Moderna's asset utilization has remained relatively stable.

In summary, based on the provided information, Moderna's Piotroski score would be 5 out of 9. This score indicates moderate financial health but suggests that further analysis is required. Moderna earns points for positive net income, ROA, CFO and change in shares outstanding. However, it does not receive points for earnings quality, leverage ratio, change in gross margin, or change in asset turnover.


Moderna faces risks that could impact its financial position and earnings. Clinical trial outcomes and regulatory approvals are critical for drug candidates, and failure in these areas can lead to delays or termination of product development. The highly competitive biotech and pharmaceutical industry poses pricing pressures and the need for ongoing investments in research and development to maintain a competitive edge. Supply chain disruptions, such as raw material shortages or manufacturing issues, can result in production delays and increased costs. Financial risks include borrowing costs influenced by interest rates and market conditions, as well as currency exchange rate fluctuations affecting international operations. Legal and regulatory compliance is crucial, as non-compliance or regulatory changes can result in fines, disputes, or product approval suspensions. Unforeseen events like natural disasters, public health emergencies, and global economic downturns can significantly impact operations, supply chains, and product demand. Investors and stakeholders should carefully consider these risks alongside other relevant information when evaluating Moderna.


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