NVAX Stock: Is Novavax Stock A Buy On Its Highly Effective Coronavirus Vaccine?

Novavax (NVAX) said co-administering its Covid and flu vaccines showed promise in a final-phase study, but NVAX stock tumbled in mid-June.


Researchers tested administering a dose of each vaccine in participants ages 18 to less than 65. The study showed both vaccines were effective compared with those who received only the Covid vaccine. The timing is ideal as the next influenza season looms, Novavax said.

But shares remained under pressure after Novavax said it wouldn’t request authorization of its Covid vaccine in the U.S., U.K. and Europe until the third quarter. The vaccine proved 90.4% effective, overall, in a recent Phase 3 test. Further, it was 93.2% protective against some variants.

Novavax is already trailing Pfizer (PFE) with BioNTech (BNTX) and Moderna (MRNA), which launched their Covid vaccines in December. Johnson & Johnson‘s (JNJ) hit the market in March. So, even though Novavax’s vaccine proved highly effective in testing, it missed the first round of inoculations in the U.S., U.K. and Europe.

Meanwhile, vaccine stocks were broadly under pressure in May after President Joe Biden voiced support for waiving patent protection for Covid vaccines. The goal is to empower other countries to make their own coronavirus vaccines.

Coronavirus vaccines could offer huge revenue potential for some companies. And experts say many will be needed to span the globe. So, is it time to buy NVAX stock?

Fundamental Analysis Of NVAX Stock

It’s helpful to examine stocks using CAN SLIM guidelines for successfully trading growth stocks. And, where it matters from a fundamental basis, Novavax stock doesn’t measure up to par.

Novavax has reported years of annual losses. From 2011-16, those losses accelerated markedly. This is common for pre-commercial biotech companies — which are typically investing in research and development — but it’s not desirable from a CAN SLIM perspective.

For 2021, analysts polled by FactSet call for Novavax to lose $6.42 per share on $2.16 billion in sales. That would follow a $7.27 per-share loss and $476 million in sales for 2020.

In the first quarter, Novavax reported a per-share loss of $3.05 and $447 million in revenue. Losses per share deepened, but revenue rocketed by a quintuple-digit percentage. This quarter, analysts expect Novavax to lose $3.63 a share and report $388 million in sales.

Savvy investors should look for companies reporting recent quarterly revenue and earnings growth of at least 20%-25%. Novavax isn’t expected to turn around a profit this year. Analysts are likely looking for its Covid vaccine to gain authorization. Stocks with such a record are more speculative and carry higher risks for investors.

Currently, Novavax revenue is entirely tied to development agreements. But that could change if the company seeks authorization for its highly effective coronavirus vaccine.

Novavax’s Planned Coronavirus Vaccine

A coronavirus vaccine would be huge for Novavax.

In June, the company said its Covid vaccine was 90.4% effective, overall, in a U.S./Mexico study. It was also 93.2% effective against concerning variants, and 91% effective in high-risk people. The vaccine also proved 100% effective against moderate and severe disease.

The company is also assessing the vaccine in children ages 12-17. Further, the company unveiled promising preclinical test data for a combination vaccine against Covid and the flu.

Novavax also announced a deal to supply 350 million doses of its Covid vaccine to COVAX beginning in the third quarter. COVAX is a global alliance to ensure equitable vaccine access. Novavax has also inked a deal that will allow Takeda Pharmaceutical (TAK) to sell the vaccine in Japan.

It has also wrapped Phase 3 studies for vaccinations against respiratory syncytial virus, or RSV, and the seasonal flu.

Notably, NVAX stock has a Composite Rating of 34 out of a best-possible 99. The Composite Rating is a 1-99 measure of a stock’s technical and fundamental growth metrics. On this measure, NVAX stock ranks just above the bottom one-third of the pack.

Shares also have a rock-bottom EPS Rating of 1. The EPS Rating is a measure of profitability and, on that bar, NVAX stock is weak. (Keep tabs on IBD Digital for more on stock ratings.)

Mutual funds hold a good chunk of the biotech stock. As of March 31, 598 funds owned 31.1 million shares, or 42.1% of Novavax stock. Institutional support is a good sign.

What Does History Say About Novavax Stock?

Founded in 1987, Novavax’s technology uses moth cells to develop molecules for vaccine development at a faster rate than the typical process, which relies on chicken eggs.

Government agencies have seen promise in that technology. But NVAX stock is plagued by some high-profile disappointments in clinical studies.

In 2011, the U.S. Department of Health and Human Services’ Biomedical Advanced Research and Development Authority gave Novavax $179 million to develop a flu vaccine. Nine years later, that flu vaccine succeeded in the final-phase test. The next day, NVAX stock popped 4%.

But its RSV vaccine hasn’t had the same luck. The biotech company received $89 million from the Bill & Melinda Gates Foundation in 2015 to develop an RSV vaccine. A year later, the vaccine didn’t meet its primary or secondary goals in older adults and Novavax laid off nearly a third of its staff.

Novavax stock ended 2016 with a spectacular downfall. Shares plummeted 85% that year.

In 2019, the vaccine failed in pregnant women and Novavax announced a reverse stock split to avoid delisting from the Nasdaq. The biotech company also sold some manufacturing facilities to Catalent (CTLT) to raise $18 million in cash.

That year, NVAX stock plunged 89%.

Now, all eyes are on Novavax’s efforts in Covid-19. The biotech company received $388 million from the Coalition for Epidemic Preparedness, a global alliance to stop epidemics. The Gates Foundation also gave it $15 million in July to develop a coronavirus vaccine.

Novavax won its biggest award in July: $1.6 billion from Operation Warp Speed, an effort by former President Donald Trump’s administration to get a coronavirus vaccine approved and distributed by January.

Technical Analysis Of NVAX Stock

Coronavirus vaccine news has spiked Novavax stock.

Novavax has a strong Relative Strength Rating of 89. The RS Rating pits all stocks, regardless of industry group, against one another in terms of 12-month price performance. On this measure, NVAX stock outranks 89% of all stocks.

According to MarketSmith.com, Novavax stock surged above a buy point at 150.60 on Jan. 29. But the stock recently round-tripped that entry.

In March, NVAX stock crumpled after the company said it would have interim data from its late-stage Covid vaccine test in the second quarter. In mid-May, the company said it would seek authorization for its Covid vaccine in the U.S., U.K. and Europe in the third quarter, sending shares falling again.

Novavax stock was also under pressure on a Reuters report that it would begin shipping its Covid vaccine to Europe toward the end of this year following struggles to source raw materials.

So, Is NVAX Stock A Buy Right Now?

No, Novavax stock isn’t a buy as of June 29. Shares aren’t currently forming a new chart pattern. (Keep an eye on Stocks Near A Buy Zone.) It’s promising, however, that NVAX stock has remained above its 50-day moving average since June 22.

The biotech company has also reported years of losses and its sales aren’t yet tied to a commercial product. All of this makes NVAX stock a speculative investment.

It will be important to watch Novavax’s efforts to develop a coronavirus vaccine, especially as leaders Pfizer, Moderna and Johnson & Johnson have already hit the market.

To find the best stocks to buy and watch, check out IBD Stock Lists. Make sure to also keep tabs on stocks to buy or sell.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.


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