Shares of Novavax (NASDAQ:NVAX) stock are tanking today after the biopharmaceutical company cut its revenue guidance for this year in half.
NVAX stock is down more than 30% at the time of writing. This comes after the Gaithersburg, Maryland-based company, whose long delayed Covid-19 vaccine was recently approved by the U.S. Food and Drug Administration (FDA), lowered its 2022 sales forecast by 50%. It now expects to generate between $2 billion and $2.3 billion in revenue. Previously, Novavax had said it expected sales between $4 billion and $5 billion this year.
Prior to today’s sharp drop, NVAX stock had been down 60% on the year. It finished trading yesterday at $57.25 per share.
What Happened
Novavax blamed the reduced sales guidance on a lack of new Covid-19 vaccine sales in the U.S. It also cited poor sales resulting from the company’s international alliance, Covax, which targets vaccines in developing nations. While FDA approval of Novavax’s Covid-19 vaccine was viewed positively by analysts and investors, it arrived toward the end of the pandemic. More than 75% of U.S. adults are already fully vaccinated against the respiratory disease. The U.S. government has only ordered about three million doses of the Novavax vaccine for use this coming fall and winter.
At the same time that it dropped its revenue outlook for this year, Novavax also reported second-quarter financial results that missed Wall Street estimates. The company posted a Q2 loss of $6.53 per share on revenue of $186 million, both of which missed the consensus estimates. Novavax CEO Stanley Erck said on a conference call, “We are now projecting that we will have no new revenues in ’22 from the U.S. or from Covax.”
Erck added that Novavax continues to be hamstrung by the fact that its Covid-19 vaccine had not yet been approved as a booster shot for teenagers in the U.S. Teens comprise the remaining market of unvaccinated citizens. Novavax’s vaccine sales declined to $55 million during Q2 from $585 million in the previous first quarter.
Why It Matters
The disappointing second-quarter results, combined with the forecast reduction, are dragging NVAX stock down today. The latest earnings print and lowered guidance also raise doubts about Novavax’s long-term prospects, especially since the company appears to have bet its future on the successful commercialization of a vaccine against Covid-19.
Novavax was quick to develop a vaccine when Covid-19 became a global pandemic in March 2020. It even received $1.8 billion in funding from the federal government. However, Novavax’s vaccine ran into numerous problems during its development, was repeatedly delayed in seeking approval from the FDA, and failed to make it to market before competing vaccines from Pfizer (NYSE:PFE), Moderna (NASDAQ:MRNA) and Johnson & Johnson (NYSE:JNJ).
While Novavax is now ramping up the manufacturing and delivery of its Covid-19 vaccine, demand for inoculations has declined significantly this year. The majority of populations around the world are now fully vaccinated against the illness. Novavax is hoping that the FDA will approve its vaccine for use in teens and children. However, the timing for that approval is unclear.
What’s Next for NVAX Stock
The reduced revenue guidance and poor Q2 results from Novavax appear to have confirmed the worst fears of investors. NVAX stock is falling hard today as a result. Moving forward, the pharmaceutical company will have to regain investor trust by demonstrating that it can find a market for its Covid-19 vaccine.
On the date of publication, Joel Baglole 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.
