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Novavax Is a Buy on Recent Developments and Cheap Valuation

Recent developments for Novavax (NASDAQ:NVAX) stock have been positive.
Source: rarrarorro / Shutterstock.com
The company finally filed emergency use authorization for its vaccine in America. More filings to come after a late-stage trial indi…

Recent developments for Novavax (NASDAQ:NVAX) stock have been positive.

Source: rarrarorro / Shutterstock.com

The company finally filed emergency use authorization for its vaccine in America. More filings to come after a late-stage trial indicated 80% effectiveness with this vaccine against symptomatic Covid-19.

Nonetheless, the recent sluggish price momentum for NVAX stock is due to several factors.

In a move that will undoubtedly disappoint investors, Novavax delivered only a portion of the 2 billion shots it planned for by 2022. The company also delayed shipment dates in Europe.

There’s some concern about the ramp-up of their delivery service. The vaccine has delivered just about 10 million doses of its shot in Indonesia, with several million more shots distributed globally, including Australia and New Zealand, which could lead to it falling short on its plans for 2022.

It is clear that while some good progress has been made over the past year – especially considering how quickly things grew at first glance after launching – there are still some areas where we need improvement.

Novavax’s vaccine has advantages over other vaccines on the market. It uses a few similar technologies from an older generation that were formerly in use, making it more trustworthy and safer for people to take. It makes it more likely to be accepted by consumers who are already comfortable with these products than ones based on novel mRNA technologies that Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) produced.

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Investors should keep a close eye on what Novavax is doing. Given the last manufacturing issues it encountered regarding vaccines, the company faces significant risks. Share performance could turn sour if there’s another lag. However, if you are risk-tolerant, NVAX stock is an enticing prospect.

Novavax Is Making Some Exciting Progress

Novavax has seen its investments grow exponentially since entering the coronavirus vaccine race. The biotech leaped into focus during the pandemic when the U.S. awarded Novavax $1.6 billion to cover a potential vaccine’s testing, commercialization, and manufacturing. The Gates Foundation also gave Novavax money to develop a Covid vaccine.

The Novavax story last year got more complicated. The company is expected to gain U.S. regulatory approval toward the beginning of this year. But manufacturing issues caused a further delay that pushed back its timeline. After resolving its production issues, Novavax applied for FDA authorization for its vaccine.

Novavax’s potential coronavirus vaccine sales are a major factor in share price with its only product on the market. It has started to secure regulatory approvals leading to the global availability of 2 billion doses per year. Novavax’s vaccine will soon be available in 30 countries after authorization from those nations.

This is an important milestone for the company because it has no product revenue to speak of until now. It looks like we may see some pretty pennies come through its doors soon.

The business is in a critical transition. But it could be worth the risk.

NVAX stock experienced issues due to markets cooling on vaccine stocks. But investors need to keep one thing in mind; the vaccine race is not over. And the omicron variant has added another dimension to the issue.

Many parents are hesitant about giving their child the vaccine for Covid-19. Out of the 40% polled, a large percentage agree to get vaccinated through traditional methods, which are still effective against this virus. That is a major plus point for NVAX stock.

The Billion-Dollar Industry Waiting to Be Tapped

While it’s not likely to make significant revenue for the company in high-income countries, initial target countries are countries that pay less. As demand for the product grows, Novavax could become an important player in international markets.

Novavax inked an agreement to deliver 200 million doses of its vaccine across Europe by 2023, and the U.S. invested in the company by placing an order for 100 million doses.

Though mRNA vaccines are safe, some people may not take them. This leaves Novavax as an alternative for those who need or want the protection but want more traditional vaccines. And some individuals may prefer to stay with a more conventional vaccine technology. Novavax is a protein subunit vaccine, similar to the over-the-counter hepatitis B vaccine and the commercialized polyvalent influenza vaccine.

The goal of subunit vaccines is to spur an immune response without containing the whole pathogen. The Novavax candidate does this with genetically engineered spike protein in nanoparticle form alongside another type of adjuvant that helps cement it into your body’s cells more tightly than any other vaccine on the market today.

In addition, with the omicron variant gaining momentum worldwide, many countries are encouraging citizens to get boosters. This should be great for Novavax and its business model. With the FDA’s recent approval of this practice, you can opt for another brand as your booster vaccine. Therefore, even if you have had a Pfizer and Moderna vaccine, you can use the Novavax vaccine.

What Are the Risks to the Bull Case?

Novavax uses cells from insects to develop vaccines; it’s able to do so at a much faster pace than if it was creating them with chicken eggs. Some government agencies are excited about this technology and have seen promising results. Unfortunately for investors, the stock is still volatile because of some high-profile declines.

When the Bill & Melinda Gates Foundation invested $89 million into a biotech company in 2015, they expected more than just one vaccine to come out. But it’s been difficult for Novavax. Almost 30% of their workforce has lost their jobs after the failure of the company’s vaccine to treat the respiratory syncytial virus.

In 2019, it seemed like all hope was lost for the vaccine manufacturer Novavax when its respiratory syncytial virus (RSV) vaccine failed to work. However, it turned things around by announcing a reverse stock split that allowed it to avoid the threat of a delisting on the Nasdaq index.

Novavax crashed late last year after a report highlighted manufacturing problems that jeopardize its ability to produce billions of Covid-19 vaccine doses, making it yet another vaccines maker posting staggering losses in today’s market.

Varying prices are common in the market, and it’s important to know how they can affect your investments. NVAX shares have seen their value fluctuate wildly over time.

Despite the company’s declaration of confidence, it has previously acknowledged that they may not effectively produce its vaccine in a timely enough matter due to global demands. According to the biotech, shortages with raw materials negatively impacted manufacturing efforts, so there were delays. Considering these issues, risk-averse investors might find this one too volatile.

Can NVAX Stock Make It Big Time?

Novavax sounds like a promising company. However, there is still some risk involved. Last year’s manufacturing struggles are still fresh in the mind of investors. However, if you’re willing to take that risk, then go ahead.

The vaccine rollout has been moving smoothly. Though there have been instances in the past where vaccine distribution has slowed down due to serious issues, NVAX stock will continue to suffer if this happens again. The company also faces potential delays in its quest for authorization from U.S. authorities which could cause problems with sales growth at a sensitive time.

There have been a lot of losses from the company. But they could turn around if they were granted authorization for its Covid vaccine. NVAX would be a great investment despite these risks.

If you’re an aggressive long-term investor, I recommend buying shares of this company. Novavax has a lot of great near-term catalysts that could make its stock rise. These include approvals, production rollouts, etc.

On the publication date, Faizan Farooque did not hold (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.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. You can check out his work on InvestorPlace and TipRanks.

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