Despite its volatility, Novavax (NASDAQ:NVAX) stock has been climbing. In 2021, the stock has already surged by 110%. However, it seems that NVAX stock is poised to rise further in the coming quarters.
The firm’s key positive catalyst is its Covid-19 vaccine. With the deliveries of its shot likely to commence towards the end of the year or in early 2022, Novavax’s revenue and cash flow are well-positioned to accelerate.
Vaccine Orders Likely to Swell
On Sept. 7, Japan agreed to purchase 150 million doses of Novavax’s vaccine. The shot is due to be distributed in the country in early 2022.
In August 2021, Novavax announced that the company had signed a deal with the European Union. Under the agreement, the EU will buy 100 million doses of the company’s shot. The bloc has an option to purchase another 100 million doses through 2023.
Additionally, Novavax has filed for emergency use approval of the vaccine in a number of developing countries like India, Indonesia and the Philippines. With a high percentage of adults vaccinated in the United States and several European countries, Novavax is targeting less developed nations.
Vaccine penetration still remains low in these countries. Therefore, the firm has a good opportunity to boost its order totals in the coming months.
A Bright Long-Term Outlook
In other major news, the United States is likely to invest $3 billion in the Covid-19 vaccine supply chain. That move will probably benefit vaccine makers. And the country’s investment suggests that Covid-19 vaccines will remain critical in the coming years.
There is likely to be third booster shots followed by annual boosters. The World Health Organization has already indicated that an annual booster dose is needed for the most vulnerable individuals.
Clearly, even though Novavax seems to be a laggard in the Covid-19 vaccine race, it has ample opportunities. Novavax has already announced that a third shot of its vaccine has yielded a four-fold increase in neutralizing antibody levels.
Novavax has also initiated a clinical trial of vaccine combinations. Specifically, the company is testing a combination of its Covid-19 vaccine and its seasonal influenza vaccine. The trial’s initial results have been encouraging. If the combination proves to be effective, it is likely to generate more cash for Novavax.
Ramping Up Production Capabilities
As of June 2021, Novavax had $2.1 billion of cash and equivalents. As a result, the company has enough funds to pay for its trials and manufacturing initiatives.
Novavax is on track to lift its production capacity to 100 million doses by the end of this month. Further, its capacity is expected to increase to 150 million doses by the end of the year.
The company already has an agreement with the Serum Institute of India to manufacture and distribute doses of its shot to low-income countries.
Given these points, I don’t think that the company will face any challenges on the manufacturing and supply fronts. In light of the company’s financial flexibility, it seems likely that Novavax will further boost its capacity if it obtains more deals with other countries.
It’s also worth noting that Novavax is supposed to file for an emergency use approval of its vaccine with the FDA. That is likely to serve as another catalyst for NVAX stock.
The Bottom Line on NVAX Stock
Novavax’s shares seems positioned for further gains, and its top line looks poised to climb in the next few years.
Novavax’s Covid-19 vaccine has been shown to be against effective against the original coronavirus and its variants. The booster shot also seems to have the potential to deliver strong antibody response.
Additionally, Novavax has a strong pipeline of vaccines that are in various types of trials. Among the illnesses that its vaccines are designed to prevent are seasonal influenza, respiratory syncytial virus, the Ebola virus, MERS and SARS. The revenue that Novavax will obtain from its Covid-19 vaccine will provide it with the means to accelerate and deepen its product pipeline.
These factors make NVAX stock attractive for both near-term and long-term investments.
On the date of publication, Faisal Humayun did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.