Novavax Stock Is a Buy After This Overdone Sell-Off

Novavax (NASDAQ:NVAX) stock took a plunge in response to a recent Reuters article, but the selloff appears to be significantly overdone.

Flag with the Novavax (NVAX) logo waving in the wind with the American flag in the background
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Novavax continues making solid progress on getting its vaccine sold and approved.

Also worth noting is that I have recently seen new evidence indicating that some consumers still have misgivings about the dominant mRNA vaccines.

Just since my last article on NVAX stock was published on Jan. 21, there has been a meaningful amount of good news for Novavax.

On Jan. 31, the company finally completed the submission of its emergency use authorization (EUA) to the FDA.

On Feb. 3, the UK, with which the company has a deal to provide 60 million doses,  approved Novavax’s shot.

Israel also agreed to purchase 5 million doses from Novavax.

The U.S. showed further faith in Novavax’s jab, as Washington agreed to fund a trial of the impact of the company’s shot on teenagers.

A Closer Look at NVAX Stock

Although the Feb. 8 Reuters’ article reported that the company only had sent out a small fraction of its promised 2 billion shots for 2022 in the story’s opening paragraph, it clarified the statement later in the article.

The small distribution number had less to do with production than distribution issues that were beyond the company’s control. These included delayed approval from the WHO and European regulators as well as export caps on the Serum Institute of India, its regional partner.

Further, it’s many if not most of the delayed doses should be delivered after the regulatory hurdles are overcome and the Serum Institute gets its act together.

In fact, Holland’s health regulator said the doses promised to that country would be available in “early March,” suggesting that other EU nations may expect to receive doses of the shot around that time.

Meanwhile, a spokesperson for one of the organizations that run COVAX, which is distributing shots to developing nations, said the group expects shots it bought from Novavax to be delivered in the near term.

Reuters made much of the fact that the Phillipines is  renegotiating its contract and considering reducing its order from Novavax.

But lower orders from one country, when Novavax has orders from many nations for many hundred millions of shots — is not a major problem for NVAX stock.

In my view, the 14% drop in the shares, as of mid-afternoon trading on Feb. 8, was way overdone, especially considering that the decline left the shares more than 70% below their 52-week high.

Some investors must agree, as the stock bounced back slightly, trading above $85 after touching $80 before yesterday’s close.

More Signs of Wariness About the mRNA Shots

Evidence that some consumers remain nervous about the mRNA vaccines, made by Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA), continue to mount.

On Feb. 8, Pfizer, a maker of one of the mRNA vaccines, reported Q4 revenue that was below analysts’ mean prediction and provided 2022 guidance that came in below analysts’ average outlook.

As of Feb. 6, only about 65% of Americans were fully vaccinated. Given these signs of skepticism about the mRNA shots, Novavax’s jab, which is based on older, more proven technology, can generate a great deal of revenue for the company.

The Bottom Line on NVAX Stock

Novavax is still making progress on getting its vaccine approved and sold.

While the distribution of the company’s vaccine has been hindered by bureaucratic and technical issues, hundreds of millions of the shots look destined to arrive at their destinations sooner than later.

Finally, multiple signs indicate that there will be strong demand for the jab in developed countries.

In light of these points, I recommend that investors buy NVAX stock on weakness.

On the date of publication, Larry Ramer held a long position in NVAX stock. 

Larry Ramer has conducted research and written articles on U.S. stocks for 14 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015.  Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.


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