Stock Analysis & Ideas

Think Novavax Has Surged Enough for Now? Think Again, Says 5-Star Analyst

Is now the right time to invest in a company whose shares have left SpaceX in the dust and blasted off by more than 1,000% in 2020?

According to B.Riley FBR analyst Mayank Mamtani, it is, if the company in question is vaccine specialist Novavax (NVAX). Not only does the 5-star analyst have a Buy rating on NVAX shares, but his price target just got a bump – up from $53 to $61. Investors can expect returns in the shape of 16%, should Mamtani’s thesis play out over the next year. (To watch Mamtani’s track record, click here)

Optimism regarding the biotech’s COVID-19 vaccine program just got another boost, too.

Last week, Novavax disclosed it is acquiring Czech Republic-based Praha Vaccines in a cash transaction worth approximately $167 million.

Putting the recent $384 million CEPI funding to good use, as part of the acquisition, Novavax will get its hands on a 150,000 square foot vaccine and biologics manufacturing facility in Bohumil, Czech Republic. Praha’s existing employees will stay on along with all the required infrastructure, which will allow Novavax to ramp up production of its COVID-19 vaccine candidate, NVX-CoV2373. NVAX believes that with the new addition it can produce more than 1 billion doses annually, starting next year.

Praha Vaccines is part of the Cyrus Poonawalla Group, also the parent company of the Serum Institute of India (SII). The SII is the world’s leading vaccine producer by volume, producing over 1.3 billion doses of vaccines per year for diseases such as tetanus, polio, and diphtheria.

In Mamtani’s opinion, the new acquisition will enable Novavax to compete with bigger players vying to be first over the line with the urgently needed vaccine. It should also assuage investors’ concerns that Novavax lacks the required resources to go head to head with industry heavyweights.

Mamtani said, “We view this as another encouraging development providing validation to the de-risked nature of NVAX’s vaccine candidate, on the basis of the most extensive/differentiated preclinical data generated to date, and now reviewed closely by global scientific community residing with CEPI, WHO, and SII as well as U.S. agencies such as CDC, NIH-NIAID, and BARDA.”

Mamtani is not alone in his assessment. All 5 analysts to have published a review of Novavax over the past three months have reached the same conclusion: Buy. Therefore, NVAX has a Strong Buy consensus rating to go along with a $49.20 average price target. The figure implies 7% upside potential over the coming months. (See Novavax stock analysis on TipRanks)

To find good ideas for biotech stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

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