Novavax’s (NASDAQ:NVAX) coronavirus shot does not appear to be gaining nearly as much traction as I thought that it would at this point. Consequently, I’m not as bullish on NVAX stock as I was last month.
While I still think that the shares can rally sharply in the medium-term and the long-term, I view the name as speculative. Consequently, I believe that only risk-tolerant investors should own NVAX stock for now. And even speculative investors should only own a relatively small number of shares.
Frankly, I had expected that by the middle of April, one million to five million doses of Novavax’s coronavirus vaccine would be administered in Europe. I believed that millions of Europeans who were worried about the problems with the mRNA vaccines would be anxious to get Novavax’s. But according to the BBC, less than 200,000 doses of Novavax’s shot had been administered in Europe as of Apr. 13.
At its current uptake rate, Novavax is probably not going to get more orders for its shot from Europe, which had been its most promising market.
And in more bad news for NVAX stock, an important U.S. Food and Drug Administration (FDA) official recently suggested that the company had not yet submitted all of the data needed for FDA approval. As a result, the agency could take longer to approve the shot than I had previously anticipated.
NVAX Stock Still Has Multiple Ways to Win
On the other hand, there are still multiple ways for Novavax to succeed and greatly boost NVAX stock in the process. The BBC interviewed several people who want a shot, but are not interested in getting a jab based on mRNA technology. Consequently, I still think there is a good chance that millions of Europeans feel this way.
Moreover, nearly 100,000 Germans, more than 10,000 French citizens, and over 33,000 Italians had received Novavax’s jab as of Apr. 13. So, the company has made some progress. It is possible that through word of mouth and stepped-up marketing, the demand for the company’s jab can greatly accelerate on the continent. And Novavax can still generate strong demand for its shot in other sizeable countries where it has been approved, including Canada, Australia, Japan and many developing nations. Strong demand will lead to additional orders.
Additionally, the company, which recently reported good results on a trial of its combined flu-and-Covid-19 vaccine, could be one of the first to market with such a shot. As a result, it may be able to sell tens of millions of that vaccine.
The final way that Novavax can succeed in the long-term is by using the revenue that it obtains from its Covid-19 shots to buy more high-potential drugs that turn out to be blockbusters.
But in order to boost NVAX stock in the medium-term, Novavax will probably need to greatly upgrade its marketing game in Europe and other markets. And at this point, it is unclear whether the company can do so.
Consequently, only speculators should own the shares and they should limit themselves to a relatively small position in the name.
On the date of publication, Larry Ramer held a long position in NVAX.