Despite the defunding of US governmental research and health services, Moderna remains in a commanding fundamental position. The company that made its name during the COVID-19 pandemic developing and manufacturing vaccines for the disease at breakneck pace also happened to have bagged a historic windfall in exchange for its performance. Less well-known is how Moderna reinvested the windfall in the wake of its success. The company has spent years plowing its profits into new innovations while maintaining a relatively pristine balance sheet for a company as large as it is. In biotech it is not uncommon for companies to keep low levels of debt, Moderna is unique among its peers for its particularly low valuation relative to its assets. Currently, the company is trading below its book value, with the potential for explosive growth depending on how any one of its numerous drug and treatment investments pan out. Even without any additional investment in medical innovation, the company has a lot of products in its pipeline ready to go.
Not just a startup vaccine manufacturer anymore. On a historic basis, Moderna can be somewhat difficult to value. This is common for biotech companies, and those whose business is innovation generally by their very nature - such companies are valued based on future potential and not necessarily current assets or past operational performance. However, the multi-billion dollar boon that Moderna received during the pandemic makes such relative valuations particularly fraught, as on a year-over-year basis the pullback from pandemic spending will tend to make it appear as though MRNA is a business in decline. On the contrary, the pullback in Moderna’s stock price - the company trades just shy of $28 as of current writing compared to nearly $500 per share at its pandemic peak - is now attractive enough to warrant calling the decline an overreaction. Despite declining COVID-19 revenues, the company can be thought of as being in a transition period, as initial biotech investments made several years ago with pandemic windfalls take several years to work their way through research and clinical trials. The company expects the clinical results of some of these investments as early as this year, but the sheer number of innovative products in the company’s pipeline make it likely that at least a few of them will be hits. Uniquely for value investors, Moderna is positioned to be a solid lower-risk biotech investment on the upswing in its research to revenue cycle.
Please note that the Woodworth Contrarian Stock & Bond Fund, LP, of which the Millegan Brothers manage and are invested in, currently holds a position of MRNA as of the publication date of this article.
Originally posted on The Millegan Memo on April 28th, 2025 by Quinn Millegan & Drew Millegan, managing partners of the Woodworth Contrarian Fund.
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