Choice of Valuation Models

[Audio] The D-C-F model is the preferred valuation technique because cash flows are realistic and given a lot of importance in business. While in D-C-F valuation model, the primary emphasis is given to future amounts of free cash flows and not total current assets, which is stressed in the Residual Operating Income (R-O-P-I-) model. Portfolio managers tend to consider money as the highest form of capital. This means that consumption based on cash value can be easily measured to reflect the amount of consumption the asset will provide (Dybek, 2023). In the same regard, identifying and comparing different cash flows within different time horizons are easily possible through the standard present value operations.

[Audio] [Other financial information used: Assumptions: Net Operating Profit Margin (N-O-P-M-): -18.00% (calculated as nopat/Sales for 2021) Net Operating Assets Turnover (N-O-A-T-): 8.00x (calculated as Sales/NOA for 2021) Net Non-Operating Assets (N-N-O--): $1.27B (Total Debt) $8.49B (Cash & Cash Equivalents) = -$7.22B Outstanding Shares: 384.40M Terminal growth rate: 3.00% Discount rate (W-A-C-C-): 10.00%].

[Audio] [Other financial information used: Assumptions: Net Operating Profit Margin (N-O-P-M-): -18.00% (calculated as nopat/Sales for 2021) Net Operating Assets Turnover (N-O-A-T-): 8.00x (calculated as Sales/NOA for 2021) Net Non-Operating Assets (N-N-O--): $1.27B (Total Debt) $8.49B (Cash & Cash Equivalents) = -$7.22B Outstanding Shares: 384.40M Terminal growth rate: 3.00% Discount rate (W-A-C-C-): 10.00%].

[Audio] To assess the intrinsic value and the market value a fundamental analysis using the Discounted Cash Flow (D-C-F--) model made it possible to obtain the approximated the equity value to -68 point 73 billion dollars in relation to the current share price of $58.72 per share. Accordingly, the projected FCF's intrinsic value is -$178.81 while the current price of Moderna's stock is $58.72 (Moderna, Inc. | Home, n.d.). Hence, the Price to Intrinsic Value of Moderna, projected F-C-F Ratio today is about -0.33 given a strongly suspect that the situation pertained to the intrinsic value being suppressed compared to the market value (Dybek, 2023). Based on the general analysis of the company and the overall market and economic environment that we came up with, the probably reason for this is the continuous innovation of new vaccines and therapeutics which would place Moderna better than its competitors in the market in the near future (Dybek, 2023). These new products were not integrated with the existing analysis when determining the market value. Consequently, there is an expectation that the intrinsic value would converge further to the market value in the next year and can converge to or even surpass it in the subsequent years..

[Audio] To understand where the Moderna stock price will be headed, we used data on Gross Profit Margin, the only ratio that is below the industry comparison and the peer comparison. Nevertheless, their estimates for the future years show that Gross Profit will rise in the future years. The revealed information indicates that in the recent years, the liquidity ratio reduced for Moderna and it is expected that, in the future years, the same trend will be observed (Dybek, 2023). Regarding solvency, it was established that Moderna uses major equity for asset funding and they are deemed risky as they continue to incur on debt from the financial institutions (Moderna Inc, 2023). In this regard, the Gross Profit and below-satisfactory liquidity ratio may depress the stock repurchase price in the farther years. But Moderna has got objectives to launch new vaccines and therapeutics that could be favorable for shifting of share price..

[Audio] After going through the pandemic in 2019, it is ascertained that the value per share was considerably low as compared to the market value of $58.72 as per the data available. After further analysis we can discern why we were substantially lower than the market share and that can be due to the fact that the company has recently released a number of new vaccines and therapeutics still under development. Indeed, in the course of the pandemic the firm's stock rose tremendously, this is very high particularly in the short run (Dybek, 2023). This suggests that the market is forward looking and has a higher expectation of future earnings for Moderna..

References. Dybek, M. (2023). Moderna Inc. (NASDAQ:MRNA) | Dividend Discount Model (DDM). Stock Analysis on Net. https://www.stock-analysis-on.net/NASDAQ/Company/Moderna-Inc/DCF/DDM?srsltid=AfmBOooJDb-uGiA7PZLkEJWfJhX7aIyaWu44tfWK9t4nnAKcPzbE-CTK Moderna Inc. (2023). Gurufocus.com. https://www.gurufocus.com/term/intrinsic-value-projected-fcf/MRNA Moderna, Inc. | Home. (n.d.). Www.modernatx.com. https://www.modernatx.com/.