Has Novavax Stock Run Its Course?

By Trefis4 days ago


Novavax (NASDAQ: NVAX) stock has declined by about 20% over the last ten trading days, although it remained roughly flat over the last week. The stock currently trades at about $177 per share. There are a couple of factors driving the recent sell-off, including the postponement of a Covid-19 vaccine deal with the E.U. on account of some production issues and lower investor interest in vaccine stocks, with the end of the pandemic now in sight. Novavaxs 11x rally over the last 12 months and its relatively high valuation also makes it very sensitive to any news flows.

So whats the longer-term outlook for the stock?We think Novavax stock remains risky for long-term investors. While Covid-19 shots from Moderna, Pfizer, and AstraZeneca have been on the market for months now, Novavaxs vaccine hasnt been approved for use yet. The shot is only likely to be cleared for use in the U.K. in the coming weeks and with the enrollment for late-stage U.S. trials completed only in late February, it could take longer for the shot to be approved and rolled out in the U.S. This means that Novavax is likely to miss out on lucrative early sales. For perspective, about a third of the U.S. population and about half the U.K population has already received at least one dose of a Covid-19 vaccine. The market for Covid-19 shots will only get more competitive as time goes on. Its likely that vaccine sales will peak this year, with supply only likely to improve going forward. For example, Pfizer intends to produce about two billion doses of its vaccine this year, noting that it should have the capacity to produce as many as three billion doses in 2022. This is likely to limit the pricing power and earnings potential of Novavaxs vaccine. Moreover, it remains to be seen if Novavaxs development pipeline, which is largely focused on vaccines for infectious diseases, can support its stock post this.

See our indicative theme of Covid-19 Vaccine stocks which includes U.S.-listed pharma and biotech companies. The theme is up almost 13x since late 2019.

[2/17/2021] Is Novavax Stock Too Risky At $260?

Novavax (NASDAQ: NVAX) stock has had a stellar run, more than doubling since early January 2021 driven by promising efficacy data for its Covid-19 vaccine. The stock is also up about 30x over the last 12 months. After such a sizable rally, is Novavax stock looking overvalued? While its difficult to give a definitive answer, we think the risks are certainly looking much higher at the current valuation. Sure, the companys Covid-19 shot is highly effective (95.6% effective against the original strain), is easier to store, and is also likely to be relatively more affordable. However, Novavax could miss out on more lucrative U.S. sales, and its also not clear if its pipeline can support its valuation post-Covid-19.

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