Count Novavax (NASDAQ:NVAX) among the many pharmaceutical companies that have seen their shares surge along with positive news about a potential Covid-19 vaccine. Novavax wasn’t one of the first to emerge from the pandemic. In fact, the company’s NVX-CoV2373 vaccine candidate isn’t yet in production. Fears that it will arrive too late have helped to make the past six months a rough ride for NVAX stock investors. The company’s pipeline of other vaccines makes Novavax a more compelling story, but it’s the Covid-19 vaccine that we’re focused on now.
Welcome to the world of pharmaceutical stocks. The potential for explosive, and long-term growth makes companies like Novavax attractive targets for investors. At the same time, there is risk.
Having a vaccine in clinical trial is no guarantee it will see the light of day. But when there’s success, the payoff can be big, and it can last for decades. NVAX stock is one of those that could reward investors with long-term growth, making it a valuable addition to their portfolio.
One of the prominent vaccines in the Novavax pipeline tells the story of 2021 for NVAX.
NVX-CoV2373 Covid-19 Vaccine Candidate
Novavax shares opened 2021 trading just under $113. However, things soon got very interesting. On Jan. 28, Novavax released the results of a stage 3 clinical trial for its NVX-CoV2373 Covid-19 vaccine candidate. In U.K. phase 3 trials with 15,000 participants, the vaccine had an 89.3% efficacy rate. It was 95.6% effective against the original Covid-19 strain.
The chair of the U.K.’s Vaccine task force commented on the results: “These are spectacular results, and we are very pleased to have helped Novavax with the development of this vaccine. The efficacy shown against the emerging variants is also extremely encouraging.”
That news shot NVAX shares to $220.94 in a single session, a gain of 67%. Within a week, NVAX stock closed at $319.93, an all-time high.
The company published phase 3 U.S. trial results in June. They were in line with the U.K. results (actually slightly higher at over 90% efficacy), which was good news. At this point all signs point to Novavax to release the vaccine in the fourth quarter. It’s late to the race — at least for the U.S. and Canada — but there are many countries that are still desperate for Covid-19 vaccines.
NVX-CoV2373 would be the company’s first commercial product in 34 years of operation. It goes without saying that it will have a lasting effect on the growth of NVAX stock.
What Triggered the February NVAX Stock Meltdown?
As quickly as NVAX shares popped at the end of January, they were on their way down again. In the first week of March alone, they shed over a third of their value. The trigger for the meltdown was primarily the approval of a competing vaccine for the U.S. market.
That’s the challenge with Covid-19 vaccines. There are more in the pipeline and every time a new one is approved, the potential market for those yet to reach production gets a little bit smaller. And the market reacts. That being said, the addressable market remains huge. At the time of this writing, 3.54 billion vaccine doses have been administered globally. Considering that most vaccines require two doses, and the world population is 7.87 billion, there is still plenty of room available for vaccine newcomers. And don’t forget the possibility that annual booster shots may be required.
Bottom Line on NVAX Stock
There are plenty of doubts around Novavax, ranging from concerns that its Covid-19 vaccine may arrive too late, to worries about disappointing trial showings of its ResVax vaccine.
However, despite a massive surge in February and subsequent plummet in March — along with all the ups and downs since — NVAX stock remains up nearly 57% since the start of the year. It earns a healthy ‘B’ rating in Portfolio Grader. In addition, the analysts tracked by the Wall Street Journal have NVAX rated as “Overweight.” If this stock hits their average 12-month price target of $249.60, that represents a 39% upside.
In other words, if you’re willing to ride through some turbulence, there’s a decent chance of long-term growth kicking in. All it takes is one vaccine to be approved and go into production for a game-changing revenue tap to be opened, and Novavax is just about there with its Covid-19 vaccine.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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