[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. 

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DCF Model is Preferred since cash flows are realistic and crucial in business. DCF emphasizes future free cash flows, not current assets. ROPI Model: Stresses total current assets, unlike DCF.  Portfolio managers value cash highly. Hence cash value easily reflects asset consumption.

[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%]. 

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DISCOUNTED CASH FLOW 2021 (Reported) 2022 (Horizon): 14.63% 2023 (Terminal): 3.00% Sales $17,700 $20,305 $20,914 NOPAT (Forecasted as: Sales x NOPM) -$3,180 -$3,645 -$3,761 NOA (Forecasted as: Sales / NOAT) $2,213 $2,538 $2,614 FCFF (NOPAT – ΔNOA) -$3,980 -$4,563 -$4,705 Discount Rate (WACC) 10.00% 10.00% 10.00% Discount Factor 0.9091 0.8264 0.7513 Present Value -$3,615 -$3,762 -$3,534 Firm Value (Cum. horizon and terminal PV) -$3,615 -$7,377 -$68,729 Equity Value (Firm Value – NNO) -$3,615 -$7,377 -$68,729

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RESIDUAL OPERATING INCOME 2021 (Reported) 2022 (Horizon): 14.63% 2023 (Terminal): 3.00% Sales $17,700 $20,305 $20,914 NOPAT -$3,180 -$3,645 -$3,761 NOA (Beginning) $2,213 $2,538 $2,614 NOA (Ending) $2,538 $2,614 $2,693 Required Return on NOA (rw) 10.00% 10.00% 10.00% ROPI [NOPAT – (NOAbeg x rw)] -$3,401 -$3,903 -$3,979 Discount Rate (WACC) 10.00% 10.00% 10.00% Discount Factor 0.9091 0.8264 0.7513 Present Value -$3,090 -$3,225 -$2,989 Firm Value (NOA + Cum. hor. & term. PV) $2,213 $2,026 -$64,806 Equity Value (Firm Value – NNO) $2,213 $2,026 -$64,806 Value per Share (Equity Value/Out. Shares) $5.76 $5.27 -$168.58

[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.. 

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EVALUATION OF INTRINSIC VALUE AND MARKET PRICE:

Moderna's intrinsic value is currently lower than market.  This discrepancy stems from suppressed projected free cash flows. Continuous innovation may bridge this value gap soon having,  Market Price: $58.72 per share. Intrinsic Value (DCF): -$178.81 per share. Intrinsic Value (ROPI): -$168.58 per share. Conclusion: Intrinsic value is significantly lower than the market price

[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.. 

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Moderna's gross profit margin has been trailing behind industry averages, but forecasts suggest improvement in the coming years.  Liquidity ratios have been on the decline and are projected to continue decreasing, which could impact the company's financial flexibility.  In terms of solvency, Moderna's heavy reliance on equity for asset financing and its increasing debt pose risks.  These financial challenges, combined with the below-par liquidity, could put downward pressure on stock prices.  However, upcoming launches of new vaccines and therapeutics may positively shift the stock's trajectory​

[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.. 

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DIFFERENCE IN INTRINSIC VALUE AND MARKET VALUE PER SHARE:

During the pandemic in 2019, Moderna's share price was significantly undervalued compared to its market price of $58.72.  After further analysis, the lower intrinsic value can be attributed to the ongoing development of multiple new vaccines and therapeutics.  Despite this, Moderna’s stock rose sharply during the pandemic, reflecting strong market confidence in the company’s future earnings potential.  This surge in stock price highlights how the market is forward-looking, with high expectations for Moderna's future product pipeline and long-term revenue growth​

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/. 

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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/

Choice of Valuation Models

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

avatar

[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%]

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.

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.

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.

 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/