Novavax (NASDAQ:NVAX) has been on a roll of late. Its Covid-19 vaccine got green-lit in Indonesia, which is likely to open the floodgates for approvals in other countries. Its coronavirus vaccine is more effective than the competition’s and already has orders of close to 2 billion doses. Moreover, Novavax isn’t a one-trick pony like Moderna (NASDAQ:MRNA), as it boasts an incredible product pipeline, with multiple vaccines in advanced trials. In short, NVAX stock remains a strong-yet-undervalued bet in the biotech space.
NVAX stock started the year off with a bang, but it’s been a bumpy ride since then. Unfortunately for Novavax investors, the company has been a victim of bad press, which has weighed on shares. Consequently, the stock now trades at a considerable discount to its long-term value. Therefore, NVAX stock has the potential to start racking up big gains in the coming year and beyond.
Too Late To the Party?
The bears believe that it’s a bit too late in the game for Novavax to generate substantial sales of its Covid-19 vaccine. With so many players already in the mix, the perception is that Novavax will find it tough to carve out a healthy piece of the market-share pie. But that notion couldn’t be further from the truth.
Novavax has said it can produce at least 2 billion doses of its vaccine next year. That’s good news because the company has already signed several big supply deals.
This includes supplying 1.1 billion doses under the COVAX program, an international vaccination effort that serves over 100 countries. The EU and India have ordered 200 million doses each, followed by Japan (150 million doses), the United States (110 million doses) and the United Kingdom (60 million doses). An additional 167 million doses have been ordered by Canada, Australia and South Korea, to name a few other countries.
Given that the approved vaccines are showing declining efficacy and only half the world’s population is vaccinated, I expect demand for Novavax’s vaccine to remain high for the next couple of years.
Most experts are of the view that the coronavirus is likely to be endemic. This means it will probably be with us forever, increasing the need for booster shots.
It’s plausible to assume that boosters may be needed annually for at least 5-10 years. This will create a massive market for booster shots, and efficacy should play a huge role in people’s vaccine preferences. That’s good news for Novavax.
On top of that, the Covid-19 vaccine is perhaps just one aspect of Novavax’s future sales. You also need to factor in sales of Novavax’s Nanoflu and respiratory syncytial virus (RSV) shots. Both vaccines have a huge addressable market, which could contribute handsomely to the company’s revenue.
The Bottom Line on NVAX Stock
The bears’ argument against Novavax falls flat. The company has orders for over 1.8 billion doses already and could potentially sell hundreds of millions more in the race to get the world vaccinated and meet demand for booster shots. Additionally, the impact of Nanoflu and RSV vaccine sales should not be overlooked.
Novavax looks remarkably undervalued relative to its competition. Consider, for instance, Moderna with its one-dimensional product pipeline. Moderna has a market capitalization that dwarfs Novavax’s at present.
Novavax has been unfairly criticized for its long-term potential to generate sales. Yet, it has generated a sizeable amount of revenue already. And analysts expect revenue to surge well over 200% this year and next. Hence, NVAX stock is undervalued with hefty upside potential.
On the date of publication, Muslim Farooque 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.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.