Novavax (NASDAQ:NVAX) stock looks reasonably attractive right now. I think there are too many positives in front of the firm for it to be a sell.
One of the best places to look to begin making that argument is its earnings report. That report was issued back in November, but it remains relevant in February.
Earnings
Novavax’s November earnings report is important for the company because it gives investors an idea of what the future might look like. When I say it gives us an idea of what the future might look like, I mean what investors can reasonably expect in terms of profitability.
So, let’s do some simple extrapolation to uncover what potentially lies ahead. What might surprise some readers is that Novavax recorded $924.09 million in revenues through the first nine months of 2021. When all is said and done, Novavax will eclipse $1 billion in revenue for 2021. Again, somewhat surprising.
What isn’t surprising is that Novavax, which critically lacks Food and Drug Administration (FDA) approval, is losing money. Through the first nine months of 2021, the firm suffered a net loss of $897.47 million.
So, let’s get to that extrapolation of future profitability.
Future Profitability
Let’s assume that Novavax has operational performance in 2022 which is similar to that in 2021. In that case, it will have somewhere in the neighborhood of $2 billion in expenses, give or take a hundred million. That should be somewhere near the amount of expenses it records in all of 2021 given that it recorded $1.785 billion through the first nine months.
But no one expects Novavax to be profitable this year. Analysts expect it to report $1.36 billion in revenues on average. But those losses all but ensure it won’t be profitable this year.
In 2022 that should be different. The analyst consensus is that Novavax will post close to $5 billion in revenue this year. That might reasonably equate to $3 billion in profit if my back of the envelope calculations have reasonable accuracy.
That would be roughly equivalent to Moderna’s Q3 fiscal year ‘21 results in which it reported revenue of $5 billion and profits of $3.3 billion.
If analysts are correct, then NVAX has plenty in store for investors after profitability starts up. Their consensus view is that NVAX stock will trade at $250 in the future. It can be had for less than $90 right now.
Why Be Optimistic?
On the one hand, that’s a good question. Novavax recently told Reuters that it has only delivered roughly 10 million doses of its vaccine. The company had stated prior that it has the capacity to produce 2 billion doses annually. Officials in the Philippines have said that they’ve received none of the 30 million doses ordered by their country.
That is distressing news to be sure. But on the other hand, FDA approval looks increasingly likely. The company submitted its request for emergency use approval with the FDA in late January. It also reported positive results in its Phase 3 clinical trials in the U.S. pediatric population.
Analysts have long suspected that NVAX stock will rocket upward one FDA approval is granted. But the press release accompanying that headline tells another important story. Novavax has a massive total addressable market:
“To date, NVX-CoV2373 has received authorization from multiple regulatory authorities globally, including conditional marketing authorization from the European Commission, the Medicines and Healthcare products Regulatory Agency, and emergency use listing (EUL) from the World Health Organization (WHO). With WHO EUL, there is the opportunity for authorization in over 170 countries with a potential reach of over six billion lives.”
What to Do
Remain optimistic because the best is ahead for Novavax. Sooner or later the market will recognize that significant bump in revenues is ahead. When it does so en masse, NVAX jumps again.
On the date of publication, Alex Sirois 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.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.
