Drugmaker Novavax (NVAX) often isn’t mentioned in the same breath as Pfizer (PFE) and Moderna (MRNA). One of the biggest reasons for this might be its difficulty in actually getting product to market. Recent word about the delivery numbers of its COVID-19 vaccine sent the stock crashing in premarket trading Tuesday, and the crash continued well into Tuesday’s session. Novavax may have some serious problems to it, but the recent substantial price drop does suggest an opportunity in the making for investors. I’m ready to stay bullish on this one.
Novavax’s year in share prices started out erratic and didn’t improve since. Back in January 2021, the company was largely plateaued around $128 or so. January’s end saw the company spike from around $131 to nearly $320 in the space of about two weeks. Naturally, this sudden, explosive growth proved unsustainable as the share price dipped close to half by the beginning of March. Another much smaller spike took the company back up over $237 per share before retracing to around $178 by the end of the month. Another downturn followed and sent share prices back under $121. Spikes and retracements followed until September, when the company dropped from around $257 to just over $135. More spikes and retracements followed, until late December. That was when the spikes largely stopped, and Novavax began a five-week plunge that only recently saw any sort of recovery.
The latest news only does more harm to Novavax; a Reuters report recently found that Novavax was nowhere near its delivery goals, having sent only a “small fraction” of the two billion COVID-19 shots it plans to deliver this year. First quarter shipments due to several nations, including the Philippines and large portions of Europe, have already been delayed. Just to underscore this point, Australia reported receiving its first-ever shipment of Novavax vaccines yesterday.
Wall Street’s Take
Turning to Wall Street, Novavax has a Strong Buy consensus rating. That’s based on four Buys and one Hold assigned in the past three months. The average Novavax price target of $243.60 implies 191.9% upside potential.
Analyst price targets range from a low of $150 per share to a high of $315 per share.
Lagging the Market Isn’t a Good Position
I do have some misgivings about Novavax. While things were looking reasonably good for the company back in late December, the fact that Novavax seems to be asleep at the switch isn’t encouraging. The company has only just sent a batch of vaccines to Australia, and is delaying shipments on several fronts. Granted, the delays aren’t entirely Novavax’s fault. Some shipments are facing “regulatory processes,” which is an old familiar refrain. Others have mostly reached their destinations, but are currently awaiting some “last mile”-style delivery in distribution warehouses.
As it turns out, this is the first time Novavax has ever launched a product. With that point in mind, it’s easy to see how it might drop the ball on a few fronts. However, while the delays are understandable in light of Novavax’s comparative inexperience, it’s still not the thing investors want to see. In fact, reports note that at least one country has reconsidered buying from Novavax in light of the difficulties in fulfillment.
On the plus side, Novavax recently landed provisional approval for distribution in New Zealand. It also obtained “conditional marketing authorization” in Great Britain and is working on an emergency use authorization in the United States.
The problem with that, of course, is that it’s woefully behind. Vaccination efforts in the United States started up during the Trump Administration. At last report, about 65% of the United States is “fully vaccinated,” though the definition changes frequently. Novavax’s ability to gain any of that market is dubious at best. Given that it’s already having a tough time meeting orders elsewhere, it’s hard to envision what it will do with fresh market share besides lose it to someone better prepared.
Concluding Views
Novavax has serious issues of fulfillment that it needs to address, and soon. However, that’s pretty much all it needs to do. Its ability to access new markets is a serious plus. The fact that its vaccine is already effective against omicron also helps it out. Additionally, it’s currently trading well off its highs, its highest price target, its average price target and even its lowest price target, suggesting a buying opportunity afoot.
I’m still bullish on Novavax for what it could do in the field. Nonetheless, it’s got to change “could do” into “did” pretty soon, or there won’t be much reason to hold out hope. The buying opportunity presented here is still well worth considering, thanks to the major price drop. Getting back to its highs, though, is going to require much better execution than we’ve seen so far.
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