We are finally seeing some traction on vaccines. People want to see the back of this crisis, and that’s why Novavax (NASDAQ:NVAX) stock and other biotechtrading s are enjoying outsized valuations.
However, the vaccine is getting tighter as we speak. Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) are already rolling out their respective vaccines. These two companies are splitting up the spoils for themselves at the moment. But this is not a winner-takes-all market.
Potentially, the whole world will have to be vaccinated. At this point, only the essential health workers are getting access to vaccines. That means there is still room for NVAX stock to grow once it clears the FDA approval hurdle. It doesn’t help that its “late-stage” U.S. Covid-19 vaccine trial has been delayed twice thus far.
Considering the vaccine’s 95% efficacy, I believe there is a high probability that the FDA will approve NVX-CoV2373 sooner rather than later. From what we know thus far, the agency doesn’t have any questions regarding the vaccine itself. Instead, their concerns are around the company’s partnering arrangement with Fujifilm Diosynth Technologies involving its commercial-scale manufacturing facility.
That’s why I believe NVAX stock is worth a small position in your portfolio. Unlike several also-rans I warned against, such as iBio (NYSEAMERICAN:IBIO), NVAX has a strong vaccine candidate that can generate an estimated $3.9 billion in 2021.
NVAX Stock: Brace for Impact
When we talk about high-risk sectors like biotechs, only two types of traders are playing the market. One set place’s importance on fundamentals. They will try to pick companies that will do well in the near to mid-term future. The rest are swing traders hoping to capture short- to medium-term gains in a stock over a few days to several weeks.
NVAX stock is interesting to both of these sets. It has a 52-week high of $189.40 per share and a 52-week low of $3.65 per share. One year volatility stands at 1.51 versus the industry average of 0.28 and 0.34 for the S&P 500.
At the same time, the company does have fundamental strength backing it up. Analysts forecast sales to increase by 562.50% in 2021, finishing at $3.45 billion. Bernstein analysts believe Novavax can end up with $3.9 billion, but that estimate hinges greatly on the continuation of clinical trials. If we see further delays, shares will tank again; however, if Novavax can get the necessary regulatory approval, expect NVAX stock to spike.
I believe that its a question of when not if the vaccine gets approval. In November, Pfizer disclosed its vaccine had produced 95% efficacy in clinical trials. Furthermore, you can store Novavax’s vaccine at refrigerated temperatures. Pfizer’s vaccine must be stored and transported at temperatures of minus 94 degrees. This means NVX-CoV2373 is your best bet if you want to transport the vaccine to remote locations.
Regardless, the next few months are not for the faint of heart. Expect a lot of volatility in NVAX stock due to positive or negative news. However, unlike several biotechs out there, there is a lot more meat to the bones.
It Ain’t Over ’til It’s Over.
Some of the pessimism surrounding NVAX stock in recent weeks is because of its perception as a vaccine also-ran. But there is $38.5 billion in sales still up for play.
According to Bernstein analysts, Pfizer is expected to make $14.3 billion, followed by $10.9 billion for Moderna, $6.4 billion for AstraZeneca (NASDAQ:AZN), $3.9 billion for Novavax and $3 billion for Johnson & Johnson (NYSE:JNJ), in vaccine-related sales. Looking ahead, the analysts project $23.1 billion in vaccine sales in 2022, $12.6 billion in 2023 and $8.5 billion in 2024.
Plus, any issues with Pfizer or Moderna vis-à-vis distribution will provide Novavax with an opening to gain a bigger market share. For a company that was a startup before this crisis, $3.9 billion-plus sales are nothing to scoff at.
I wouldn’t want to initiate a sizeable position, considering that it has lost out on the early mover advantage. However, I still believe shares offer upside, since they are trading at a substantial discount to their peers.
NVAX stock is at 61.4% of its 52-week high and has a 12-month price target of $189 per share, a 67.3% premium to the current market price. Considering the positive catalysts still to come, I rate shares a “buy”. It doesn’t matter if you want to hold them long are just interested in trading. There is plenty here to keep you interested.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
