Novavax (NASDAQ:NVAX) could have become the biggest stock of the year but just one hold up and it is right where it started. The company started the year with big news and massive potential but it is still awaiting the U.S. Food and Drug Administration approval for its Covid-19 vaccine. This is significantly affecting the stock’s growth prospects. NVAX stock has gone from $270 to $84 today. It is down more than 65% in the past year and has seen a major dip since the beginning of this month.
But this does not mean that Novavax has lost the vaccine race.
The company’s vaccine has authorization in more than 35 countries. It has also started shipping to the European Union. It forecast $4 billion in 2022 sales and this number could go higher. But the one thing that will decide if the stock will hit triple-digit again or not is the authorization of its vaccine by the FDA. Novavax submitted their application back in January and is still awaiting approval from the FDA. It is natural to be frustrated with the slow pace of the approval but it could be very close.
Once it receives approval, NVAX stock will pick pace. With that in mind, let’s dig deeper into what should you do with NVAX stock.
Why Is the FDA Decision Taking So Long?
Novavax has provided all the necessary details required for an FDA approval but it looks like there is an unexpected delay. Seven weeks have already passed since the company filed for authorization. There were earlier issues with manufacturing and other technical concerns but these have now been resolved.
That said, several countries have already have sizable supplies of vaccines, and large percentages of their populations already inoculated. But this does not mean that the demand is going down all that much. Novavax has a “traditional” protein based vaccine and there still some unvaccinated folks (around 23% of the U.S. population is still unvaccinated) waiting for it. The vaccine has high efficiency and it has proved its worth in the trial results.
But these holdouts will have to keep waiting without FDA approval. Approval is taking a lot of time and the frustration is getting real. On the other side, when you look at the big picture, Novavax has a huge global demand and it already has contracts with several other countries. It still has the opportunity to become a leading provider of Covid-19 vaccines to low and middle-income countries. This could generate huge revenue in 2022 and beyond.
We do not know whether we will require booster shots each year or whether there will be a new Covid-19 variant. All the uncertainties are an opportunity for Novavax to grow. 2022 could be a good year for Novavax if all goes as planned but there is a big hurdle it needs to clear.
The Bottom Line on NVAX Stock
If you own NVAX stock, hold it. Now is not the time to get rid of the stock. We will see a surge in NVAX stock once the FDA approves. If you are planning to invest in the stock, now is a good time to buy since the approval will take it higher. However, when it will happen is hard to predict.
The uncertainty remains and if you are bullish on the prospects of the company, now is a good time to take a small position. On the other hand, if the FDA does not approve the vaccine or there are further delays, the stock might remain stuck in the present range of $70s.
You may not see the stock rebound anytime soon but it could happen in the coming months.
On the date of publication, Vandita Jadeja 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.
