Production Updates Could Give Novavax Stock a Big Boost

As with the other vaccine stocks, most investors seem to have given up on Novavax (NASDAQ:NVAX). But as the crowd abandons NVAX stock in droves, is it a buy?

Novavax (NVAX) logo surrounded by medical supplies

Source: Ascannio/Shutterstock.com

It depends. On the one hand, if analysts’ average earnings projections for 2022 are to be believed, the shares have been oversold. According to Yahoo! Finance, their mean 2022 earnings per share projection for the company is $25.03. Based on that estimate, the shares are trading today for just 3.15 times this year’s EPS.

On the other hand, take a look at the latest headlines about the company’s deliveries of its shot. According to Reuters, as of Feb. 8,  the biotech firm had delivered only slightly over 10 million of the 2 billion doses it intends to ship this year. Shipments of the jab that had been scheduled for Q1 will now take place later this year. This news, if true, points to more disappointment and another big drop for this already hard-hit stock.

Buy buying the shares may be a worthwhile move at this point.

The Latest News About NVAX Stock

Many people call  Novavax — in relation to the vaccine makers that are already in the winners circle, like Moderna (NASDAQ:MRNA) or Pfizer (NYSE:PFE) — the “also-ran” or “late to the party” vaccine contender.

To some extent, this is true. While Moderna and Pfizer have raked in billions distributing their respective jabs worldwide, Novavax has barely gotten started. Yet unlike some other so-called “also ran” vaccine plays, like Ocugen (NASDAQ:OCGN) for example, Novavax is at least pretty close to the finish line.

As I’ve noted in past columns about NVAX stock, the company has received regulatory approvals in many markets outside the U.S. So for Novavax, the money is there to be made. The vaccine maker, literally,  just needs to “deliver the goods.” But many skeptics believe that the company will fail to “deliver the goods.” 

But while the firm is facing the latest in a long-series of hiccups and setbacks, I wouldn’t write off the chances of it delivering billions of doses, generating billions of sales, and becoming profitable this year.

Novavax’s Deliveries Could Come in Better Than Expected

Many have taken the recent news about Novavax, on top of last year’s lack of progress, as a sign to give up completely on NVAX stock. Yet there are reasons to be upbeat on the shares.

First of all,  Novavax said that its lower-than-expected shipments had been driven by regulatory delays. The statement suggests that the company’s latest issues are not related to the production of its shot. Once the regulatory red tape clears up, the company could begin turning its orders into revenue, lifting NVAX stock.

But their shares may not regain their all-time high of $292, and a move to $300, $400, or even $500 per share is even less likely. The shares, however, could reach $100 again.

Admittedly, negative updates on the jab could cause NVAX stock to tumble. So although the shot has reached the commercialization stage, it’s best to treat the stock more like the jab is still in the clinical stage. In other words, take only a small position in NVAX stock, with the understanding that the investment could deliver a big gain or a big loss.

NVAX Stock Can Still Rally

Novavax may still benefit from a  “booster catalyst.”

As Dr. Marc Siegel, clinical professor of medicine at NYU Langone Health argued in a recent Wall Street Journal op-ed piece, Novavax’s traditional vaccine could prove to be a more effective booster shot than its rivals when it comes to combating future coronavirus variants. As a result, if Novavax’s shot winds up obtaining approval from the FDA, the company could sell many of the jabs in the U.S.

Keep in mind the high risks of NVAX stock and don’t bet the ranch on it. But it can still rally, so it’s worth buying at today’s prices.

On the date of publication, Thomas Niel 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.

Thomas Niel, a contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.


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