One of the stock subgroups that’s gaining significant attention in today’s market is that of Covid-19 vaccine makers. Among today’s biggest winners is beaten-down Novavax (NASDAQ:NVAX). Shares of NVAX stock are up more than 15% in afternoon trading, despite being down more than 75% over the past year (and much more from its peak).
Of course, enthusiasm around Covid-19 vaccine stocks has dwindled considerably over the past couple of years. The pandemic has been declared over, and most investors have moved on to the next structural trends worth caring about. For Novavax, one of the last companies to receive Food and Drug Administration approval for its vaccine, the profitability window has closed even faster. Thus, this stock’s decline over the past year is one that makes sense in this context.
That said, today’s increase appears to be tied to newfound optimism around increasing demand for Novavax’s shots this fall. The “Eris” variant is purportedly the dominant strain now in the U.S., and it’s expected that more individuals will seek out boosters. Additionally, the Biden administration is reportedly looking at increasing calls for boosters heading into the fall in a bid to stabilize the healthcare system.
Let’s dive into what investors should make of today’s move and whether this is sustainable.
Can This Move in NVAX Stock Be Sustained?
Most of us don’t want to consider a pandemic-like reality again. And while much of the global population is vaccinated against the coronavirus, it’s likely going to take ongoing booster shots to control the spread and mortality rate associated with Covid-19. At least, that’s what many investors in vaccine stocks continue to hope for.
To be sure, Novavax certainly got the raw end of the bargain when it came to the approval process for its vaccine. By the time Novavax came to market, other major pharma players dominated the landscape, and folks were tuning out of anything Covid-related.
It’s likely that we haven’t won the war on Covid-19, far from it. Like the flu, booster shots will be recommended each and every year for most individuals and highly encouraged for specific vulnerable groups. However, the question is which shot a specific healthcare provider will recommend. Today’s price action with NVAX stock suggests investors are still bullish on the company’s potential role in handling future demand, as well as the improved demand outlook moving forward.
On the date of publication, Chris MacDonald 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.
