How high can the Novavax (NASDAQ:NVAX) stock go? That’s the question investors should be asking themselves as opposed to when it will come crashing down.
NVAX stock has been on an absolute tear lately, rising 29% in the past month and up 116% year-to-date.
The share price is now flirting with $280.00, raising the question about whether the stock has more runway ahead or is it due for a pullback after its latest rally?
Given that Novavax stock remains well below its 52-week high of $331.68, there’s reason to believe that the company’s shares can move even higher in the coming months.
To be fair, it has been an up-and-down year for NVAX stock. While shareholders are no doubt happy today, they have had to endure some big peaks and valleys over the last eight months.
Novavax’s stock was as low as $121 a share in mid-May of this year. The turbulence was caused by the perception that the pharmaceutical company had missed its opportunity to get its Covid-19 vaccine approved and distributed worldwide.
It was this perception that caused it to start losing valuable market share to competitors such as Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) whose Covid-19 vaccines are now widely available globally.
The latest catalyst for NVAX stock came after it was reported that the company is now in clinical trials for a Covid-19 booster shot that is potentially effective against the powerful Delta variant of Covid-19.
Investors seem to like that Novavax is turning its focus towards the variants of the Coronavirus, where there is still opportunity and need for effective vaccines.
Repeated delays this past spring were part of the reason Novavax’s stock had been beaten down. The delays kept the company from filing for Emergency Use Authorization of its primary Covid-19 inoculation with the U.S. Food and Drug Administration (FDA), something Novavax now says it will do in this year’s fourth quarter.
NVAX is expected to report Q4 results in March 2o22, putting the earliest application date in December.
European Union Deal and NVAX Stock
While news of Novavax’s Covid-19 booster shot has certainly helped lift the company’s share price, NVAX stock began to recover in earnest beginning in early July when it was announced that the European Union agreed to buy up to 200 million doses of the company’s primary Covid-19 vaccine.
The European Union plans to buy 100 million Novavax doses this year and has an option to purchase another 100 million doses through 2023 once the vaccine is approved by the European Medicines Agency.
Novavax’s share price jumped 19% higher immediately after the announcement was made public.
Regulatory approval in the U.S., Europe and other jurisdictions around the world appears to be the last hurdle that Novavax needs to clear before its distribution of Covid-19 vaccines can ramp up.
The company’s vaccine has produced impressive results in multiple clinical trials. The vaccine was found to be 89.3% effective in a British and South African study and 90% effective in a late-stage study conducted in the U.S. and Mexico. Plus, Novavax’s vaccine can be stored in regular refrigerators, making it easier to distribute around the world.
The European regulator anticipates that Novavax will send it the data needed for approval of its Covid-19 vaccine in early October. This date is key as the European Union has said it wants to be able to receive and begin distributing Novavax’s vaccine before the winter sets in.
Should Novavax miss the October deadline to provide the data needed for regulatory approval, it will almost certainly have a negative impact on the company’s share price. Novavax said during its most recent earnings announcement that it is on track to meet the European deadline.
Invest in the Potential
NVAX stock is by no means a sure thing. The company’s Covid-19 vaccine has shown great potential in clinical trials and the deal struck with the European Union holds much promise for the company and its shareholders.
Bringing Covid-19 booster shots to market would be a big win for the company as well. However, Novavax has struggled to meet deadlines and has yet to clear the regulatory approvals needed to begin distribution of its medications.
While the long-term story with Novavax remains hopeful, investors should remain pragmatic when it comes to the company. Until it gets the green light from regulators, Novavax’s vaccine remains on hold.
Disclosure: On the date of publication, Joel Baglole did not have (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.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.