Moderna (MRNA) Could Be 238% Overvalued On Melanoma Trial Progress

Moderna (MRNA) is back in focus after releasing positive Phase 3 topline results for intismeran autogene, its individualized mRNA cancer therapy, in combination with Merck’s KEYTRUDA in resected high risk melanoma.

For investors, the positive Phase 3 data arrives after a period of sharp volatility in Moderna’s stock. The latest US$149.66 share price comes after a 1 month share price return of 169.03% and a year to date share price return of 384.96%. The 1 year total shareholder return of 496.25% contrasts with a 5 year total shareholder return that is still down 61.62%. Recent gains have been fuelled by optimism around the oncology pipeline and broader mRNA opportunities. However, the 1 day share price decline of 5.77% and 7 day share price decline of 14.18% around the planned US$2.0b convertible notes offering suggest investors are also reassessing funding plans and risk.

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Bulls point to Moderna’s oncology data and mRNA pipeline as support for a higher price. Bears focus on losses, funding needs and a share price that has raced ahead. Which case does the current valuation framework support next?

Most Popular Narrative: 238.2% Overvalued

Moderna’s most followed narrative pegs fair value at $44.25 per share, well below the latest $149.66 close. This puts a spotlight on the assumptions behind that gap.

The analysts have a consensus price target of $44.25 for Moderna based on their expectations of its future earnings growth, profit margins and other risk factors.

In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be $3.7 billion, earnings will come to $695.7 million, and it would be trading on a PE ratio of 33.0x, assuming you use a discount rate of 7.3%.

Read the complete narrative.

Want to see how Moderna gets from heavy losses today to that earnings profile? The narrative leans on faster revenue expansion, rising margins, and a premium future earnings multiple. It also highlights which building blocks carry the most weight in that model.

The same narrative framework uses a discount rate of about 7.26% and assumes Moderna can scale its mRNA portfolio across flu, RSV, CMV, oncology and rare diseases to support higher profitability. It also factors in analyst expectations that the company remains unprofitable over the next three years while revenue grows at a quicker pace than the broader US market. This helps explain why the implied future earnings base is so important to the fair value estimate.

Result: Fair Value of $44.25 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this Moderna narrative could be knocked off course if COVID and respiratory vaccine revenues remain under pressure or if regulatory decisions delay key product launches.

Find out about the key risks to this Moderna narrative.

Next Steps

The debate around Moderna is clearly split. If you want to move fast and build your own view based on the data, start by weighing the 1 key reward and 1 important warning sign.

Looking for more investment ideas beyond Moderna?

If Moderna's story has you thinking bigger, do not stop here. Use clear data and filters to identify other opportunities before they move out of reach.

• Target value opportunities by scanning companies that combine quality fundamentals with attractive valuations through the 51 high quality undervalued stocks.
• Prioritise resilience by focusing on companies with stronger financial positions and steady fundamentals using the 75 resilient stocks with low risk scores.
• Look for potential future leaders early by reviewing a curated 20 high quality undiscovered gems.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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