Pity the poor Novavax (NASDAQ:NVAX) investor. The stock’s down more than 40% so far this year. And while there’s some legitimate analyst momentum that NVAX stock will rebound in the next nine months, geopolitical tensions pose a new risk.
NVAX has emergency use authorizations to distribute its Covid-19 vaccine in more than 30 countries. Australia granted approval on Jan. 19 for the company’s branded Nuvaxovid shot. And the European Commission authorized Novavax’s Covid vaccine in December.
Also, the European Union signed an advanced purchase agreement for NVAX to supply 200 million doses of its vaccine.
As long as the vaccine maker is shut out of the U.S. market, its best hope of profits lies internationally. And there’s a huge market there.
But I’m worried that the Russia-Ukraine conflict will throw cold water on those plans.
Russia Messes It Up for Everyone
I have no problem casting Moscow and Russian President Vladimir Putin in the role of villain with this one. After a long buildup along the border, Russia flat-out invaded its western neighbor in February. Putin wants to put a pro-Russia regime in charge in Kyiv.
It all comes from Putin’s fear that Eastern European countries would rather be aligned with NATO and the west than with Moscow. Ukraine was formerly a part of the USSR, but after that breakup 30 years ago, the Ukrainian people democratically elected a government that wants closer ties to the west.
NATO also recognized Ukraine as an aspiring member. Moscow claims that the U.S. broke a security agreement dating back to 1990 that NATO would not expand eastward. Over the last two decades, several eastern European countries joined NATO, including Poland, Hungary, Croatia and Bulgaria.
This is no small conflict. Russia committed more than 100,000 troops and invaded from its own territory, from an allied neighbor Belarus, and from the Crimean peninsula that it illegally annexed a few years ago. And the Kremlin warned western nations that they face extreme consequences should they try to interfere in Russia’s military action.
Europe and the U.S. aren’t taking this lying down. The EU closed its airspace to Russia. And many Western nations announced widespread sanctions intended to cripple the Russian economy.
It’s not a good situation.
Novavax’s Global Role
It’s great that most Americans are vaccinated at this point and that the omicron variant is fading away. But as long as there are spots around the world that aren’t vaccinated from Covid-19, we’re always going to live under the threat of the next variant.
For instance, Haiti still has less than 1% of its population that’s fully vaccinated. Indonesia has only 52% of its population vaccinated. Ukraine’s vaccination rate is 34.5%, and Russia’s rate is still less than 50%.
Novavax is a key player to take Covid-19 vaccines around the world. Its shot doesn’t require freezer storage. That makes it easier to ship to countries that have a lower immunization rate and a weak infrastructure.
Unfortunately for Novavax, a regional military conflict will hurt any effort manufacture or transport vaccination doses to underserved populations. And if Novavax can’t get its doses out to the world, NVAX stock will never reach the highs that analysts predicted.
Again, it’s not a good situation.
The Bottom Line on NVAX Stock
A few weeks ago, I wrote that NVAX stock could be the biggest bargain in the stock market right now. The company is waiting for U.S. authorization for its Covid-19 vaccine. And it’s a key player in the critical effort to vaccinate the world and put an end to dangerous variants.
You can still find price targets for NVAX stock in the $200s, with an average price target of $215 per share. That’s a huge increase from its current price of $82.
But the longer the Ukraine-Russia conflict goes on, the less I’m going to like Novavax’s prospects for global distribution. It’s definitely something to keep an eye on.
On the date of publication, Patrick Sanders did not hold (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.
Patrick Sanders is a freelance writer and editor in Maryland, and from 2015 to 2019 was head of the investment advice section at U.S. News & World Report. Follow him on Twitter at @1patricksanders.
