Let the Market’s Shakeout Finish Before Buying Novavax Stock

• Novavax (NVAX) stock traders may be tempted to buy the dip after a share-price crash.
• Yet, underwhelming financial performance and the stock’s negative price pressure make it difficult to recommend an investment now.
• Investors should stay cautious until there’s a turnaround in sentiment with Novavax.

Source: vovidzha / Shutterstock.com

Novavax (NASDAQ:NVAX) develops and markets novel products to prevent a broad range of infectious diseases. To many investors, Novavax is best known for developing Covid-19 vaccine NVX-CoV2373, also sometimes known as Nuvaxovid. Even though NVAX stock might seem like a high-potential Covid-19 vaccine stock, it’s time for investors to be careful, not aggressive.

As you are probably aware, Novavax wasn’t the first to market in the U.S. with a Covid-19 shot — not even close. Still, there were times when investors sent the Novavax share price to new heights.

Those good times seem to be in the rear-view mirror now, though. The thrill is gone for NVAX stock traders, and the stock’s performance in 2022 so far has been less than stellar.

Granted, part of the traditional “buy low, sell high” strategy is to buy stocks during peak pessimism. Nevertheless, after learning the essential facts about Novavax — and one prominent analyst’s bearish opinion, as well — you might be persuaded to stay on the sidelines.

Ticker
Company
Current Price
NVAX
Novavax
$47.03

What’s Happening With NVAX Stock?

Just within the past 12 months, NVAX stock has sailed as high as $277.80. Lately, it has been closer to the $50 area, so there’s no doubt that the sellers are in charge.

Before you start dreaming of a return to the $200s, you should at least consider what you’re investing in. Novavax’s fate depends largely on the company’s success in getting NVX-CoV2373/Nuvaxovid approved by regulators and then commercialized. It’s certainly not an easy task.

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It’s true that Novavax managed to get its Covid-19 vaccine authorized in a number of major world markets, including the European Union, Australia, Canada and Great Britain. This hasn’t prevented a major selloff of NVAX stock, though.

Perhaps a closer look at Novavax’s financial situation could help bolster the bull case. So, let’s see what the data reveals.

Room to Go Lower

On the positive side of the equation, Novavax recently had its first profitable quarter as a commercial-stage company. Unfortunately, Novavax’s first-quarter 2022 revenue of $704 million fell short of the analysts’ consensus estimate of $845 million.

Apparently, those mixed results didn’t convince Bank of America Securities analyst Alec Stranahan to issue an optimistic call on NVAX stock. He gave Novavax an “underperform” rating along with a price target of $35.

Stranahan cited a “bearish view on continued C-19 booster use, unclear benefit as a heterologous option, and waning immunity against new variants (i.e., Omicron).” Therefore, he envisions room for Novavax shares “to trade lower still.”

What You Can Do Now

Stranahan’s bearish call hits hard, and his points are duly noted. The last thing anyone needs now is to buy NVAX stock and then watch it slide to $35.

Sure, it’s great that Novavax achieved a profitable quarter. This, however, probably won’t be sufficient to get investors excited about Novavax again. Hence, it’s wise to just stay out of the way, just in case the shares end up trading “lower still.”

On the date of publication, David Moadel 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.

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