Novavax Is Set to Win on the Increasing Necessity of Booster Shots

Novavax (NASDAQ:NVAX) continues to be a wild ride for investors. NVAX stock has lost some 35% of its value since the end of September. In general, vaccine stocks have dropped upon the news of Merck’s (NYSE:MRK) Covid-19 pill.

Novavax (NVAX) logo surrounded by medical supplies
Source: Ascannio/Shutterstock.com

Further weighing down on NVAX stock is large insider selling. The company’s CEO, Stanley Erck, offloaded roughly 92,000 shares at the start of October. So, given that NVAX has broken the 200-day moving average, is the stock still a good investment?

This insider transaction doesn’t particularly bother me, as insider selling is not as strong a signal as insider buying. The selling of these shares was executed in accordance with a pre-agreed trading plan.

All told, I am still bullish on NVAX stock. While I can foresee some short-term difficulties, I believe the long-term potential is still intact here. This is why investors should consider this stock a buy on the dip.

NVAX Stock: The World Needs Booster Shots

It is becoming increasingly clear that the world’s population will need to get at least one booster shot for Covid-19. This is especially true for the immunocompromised and the elderly, who may not have built as strong of a defense from the initial doses. In fact, booster shots are already seeing significant need in places like Israel and Bahrain, possibly signaling future policy direction for the United States and other countries.

What’s more, the U.S. Food and Drug Administration (FDA) recently cleared both Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) for additional doses. Plus, the Centers for Disease Control and Prevention (CDC) is recommending booster shots for three major demographics. Scientific American defined these groups as such:

“[T]hose aged 65 or older, those aged 18 to 64 who have underlying health conditions that put them at risk of severe COVID and people in the latter age group who are at high risk of occupational exposure, such as health care workers and teachers.”

Finally, the National Institutes of Health (NIH) recently released positive results from a study regarding “mixing and matching” vaccines. According to The Atlantic, the 458 person study showed that mix-and-match booster shots are safe and could possibly lead to better outcomes.

While the study was done for existing vaccines in the market, the fact that “mixing and matching” is safe and effective is good news for Novavax and NVAX stock. It means there is still a huge market opportunity for the company despite it being late in the game. Plus, considering Novavax’s vaccine uses a different technology than what is currently available in the market, it could end up being the booster of choice.

Novavax Needs to Execute

So, how can Novavax capitalize on this potential? Management’s ability to execute remains the key risk for investors in NVAX stock. The company’s vaccine could be miles better than what’s out in the market today, but all of that is useless unless it get its product into people’s arms.

That said, I am happy to see that Novavax is already making strides in this department. By all accounts, it is gearing up for a launch real soon.

For example, the company recently inked a deal with Mabion, a biotech company based in Poland. The contract is a manufacturing agreement for the large-scale production of protein antigens, a key component of Novavax’s vaccine. When it comes down to it, Mabion’s GMP-certified facility is a great addition to the company’s global supply chain — especially in light of other manufacturing issues. Management noted the following:

“The addition of Mabion’s technical expertise and production capacity to Novavax’ global manufacturing network expands our ability to provide broad access to our vaccine across multiple regions.”

The Takeaway on NVAX Stock

Hopefully, we will hear more news like this coming out of Novavax in the next few weeks. Investors are beginning to lose patience regarding this vaccine launch. Any further delays may punish the stock. However, in my view, the potential upside on NVAX stock is likely worth the risk all the same.

Consider this pick of the vaccine plays a buy.

On the date of publication, Joseph Nograles 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.

Joseph Nograles is a part-time freelance copywriter focused on the financial industry. He has worked in a wide variety of industries from tech to consulting with one of the “big four.” He has always enjoyed analyzing businesses and has been a CFA charterholder for nearly a decade now.


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