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Novavax, Inc.: NVAX Stock Gets Gutted — Can It Still Double?

Novavax stock is leading the biotech charge downward on sour earnings

Novavax, Inc. (NASDAQ:NVAX) stock holders are taking a tour of the pits Wednesday morning, as Novavax takes a severe hit after earnings.

Novavax, Inc.: NVAX Stock Gets Gutted, Can It Still Double?It wasn’t long ago that financial journalists were crowning NVAX as a stock that could double. Analysts earmarked Novavax shares for $14.47 within the next year, as the company positions itself for commercial success. That’s approximately 96% from the high watermark of $7.37 Tuesday.

Today, shares are back under $7, as the stock takes shareholders on yet another neck-breaking downturn. And it’s not really hard to see why.

NVAX Earnings Rundown

Novavax reported a loss of 29 cents per share on revenues of $2.5 million. The Street was expecting a per-share loss of 23 cents on $7.62 million in sales. Ouch.

But compared to the same quarter a year ago, these results hurt even more. In Q2 2015, NVAX posted an EPS loss of 8 cents on $14 million. That’s an 82% decline in sales year-over-year!

Upping its research and development expenses 134% to $65 million didn’t help the bottom line, and neither did a 99% increase in general and administrative costs to $14.1 million. Both figures are well above the $28 million and $7.1 million for R&D and G&A, respectively, in Q2 2015.

Silver Lining for NVAX Stock

It’s not all bad news, though. The biotech reported $366 million in cash and securities, up from $230.7 million at the end of last year. That’s plenty to pay off its current liabilities.

And the bull case still remains intact for Novavax. That is, while AstraZeneca Plc (ADR)‘s (NYSE:AZN) Synagis treatment for respiratory syncytial virus, or RSV, works only in children with advanced cases and needs to be given once a month to be effective, Novavax’s RSV F vaccine works for pregnant women and adults over the age of 60. What’s more, it needs to be administered once in the third trimester and, for older adults, once a year.

The biotech is currently executing multiple trials for its RSV F vaccine to evaluate the prevention of moderate to severe cases of RSV, evaluate its safety and determine how effective it is in maternal immunization. Once on the market, analysts have predicted it will generate more than $2 billion a year by 2024. But that’s a ways away.

Bottom Line on Novavax Stock

Today’s move is on dismal earnings for sure, but at least some of it’s due to the negative sentiment on biotechs in general. Just look at the iShares Nasdaq Biotechnology Index (ETF) (NASDAQ:IBB), down 1.7% today after a 9% runup over the past month.

So, can NVAX stock still double from here? I mean, anything’s possible. But when it comes to a stock with such a volatile history, it’s better left to the swing traders and buyout hopefuls.

As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.

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