CureVac's Valuation Divergence: Why the DCF Model Suggests the Stock is Severely Undervalued Despite Cautious Narratives

The biotech sector has long been a battleground for contrarian investors, where market sentiment often lags behind fundamental realities. CureVac N.V. (CVAC), a pioneer in mRNA therapeutics, exemplifies this dynamic. Despite a recent 30-day market capitalization decline of -6.51% according to market data, the stock's intrinsic value, as calculated by a discounted cash flow (DCF) model, suggests a significant undervaluation. This analysis explores why the DCF model, when applied with industry-appropriate assumptions, paints a starkly different picture from the cautious narratives dominating CureVac's stock price.

Market Valuation vs. DCF Intrinsic Value

As of November 26, 2025, CureVac's market capitalization hovered between $1.14 billion and $1.17 billion, with a stock price in the $5.00–$5.50 range. However, a DCF model using a two-stage approach-assuming a 9% discount rate, 5% growth stage rate, and 4% terminal growth rate-estimates an intrinsic value of $9.68 per share. This implies the stock is trading at a 40% discount to its calculated fair value. The divergence is striking, particularly given CureVac's robust cash reserves and strategic restructuring efforts.

CureVac's Q1 2025 cash position stood at €438.3 million, with cost-cutting measures reducing R&D outflows compared to prior periods. Analysts project this liquidity will fund operations until 2028, a critical factor in mitigating near-term risk. Yet, the market appears to undervalue these strengths, focusing instead on the company's Q1 2025 operating loss of €54.7 million according to financial reports and a year-over-year revenue drop from €12.4 million in Q1 2024 to €0.9 million in Q1 2025 as reported in financial disclosures. This revenue contraction, driven by the restructuring of its GSK partnership, masks underlying progress: CureVac recognized €50 million in Q3 2025 from a GSK license amendment and €11.1 million in BioNTech/Pfizer royalties according to official results.

Industry-Appropriate DCF Assumptions

Critics of CureVac's DCF valuation often cite the company's pre-commercial status and high burn rate as justification for conservative assumptions. However, industry benchmarks suggest these parameters may be overly cautious. Clinical-stage biotech firms typically use discount rates of 13.3–13.6%, reflecting the elevated risks of drug development. Applying a 13% discount rate to CureVac's projected cash flows still yields an intrinsic value of $7.20 per share, a 30% premium to the current price.

The terminal growth rate, another key DCF input, is often aligned with macroeconomic growth (2–3%) or industry-specific expectations. CureVac's DCF model assumes a 4% terminal growth rate, which is reasonable for a company with a diversified pipeline and potential milestone payments from partnerships. For context, the biotech sector's long-term growth potential, particularly in mRNA therapeutics, could justify higher rates. A 5% terminal growth rate would push the intrinsic value to $10.40 per share, further widening the valuation gap.

Contrarian Case: Beyond Short-Term Volatility

The market's skepticism is understandable. CureVac's Q3 2025 revenue of €54.1 million pales against the €493.9 million it generated in the same period of 2024, a decline largely attributable to the absence of a one-time GSK payment as disclosed in financial results. However, this comparison overlooks the company's strategic pivot toward sustainable revenue streams. The €400 million GSK licensing deal and ongoing royalty agreements as reported in financial statements provide a clearer path to profitability than the volatile partnership model of 2024.

Moreover, CureVac's cash runway into 2028 reduces the urgency of near-term financing, a critical factor in biotech valuations. While the company's 2025 net loss of $0.39 per share aligns with industry norms, its projected free cash flows-reaching €99 million by 2029 according to financial analysis-suggest a transition to positive cash generation. The DCF model's long-term projection of €315.97 million in free cash flows hinges on these milestones, which the market may be underestimating.

Conclusion: A DCF-Driven Opportunity

CureVac's valuation divergence stems from a mismatch between its conservative DCF assumptions and the company's actual risk profile. While the market applies a 13%+ discount rate to clinical-stage biotechs, CureVac's DCF uses a 9% rate, artificially lowering its intrinsic value. Similarly, its terminal growth rate of 4% understates the potential of its mRNA platform in a sector poised for disruption.

For contrarian investors, the key takeaway is clear: CureVac's current valuation fails to account for its liquidity, strategic partnerships, and long-term cash flow potential. At $5.00–$5.50, the stock offers a compelling risk-reward profile, particularly for those willing to look beyond short-term volatility. As the biotech landscape evolves, CureVac's DCF-based fair value of $9.68–$10.40 per share could serve as a powerful catalyst for re-rating.