Shares of vaccine manufacturer Novavax (NVAX) slipped 4.5% on Monday, victim to both a broader selloff in stock markets in response to financial concerns in China, and a Food and Drug Administration advisory committee vote Friday recommending against giving Covid booster shots to most adults in the U.S. But while the stock was down yesterday, B. Riley analyst Mayank Mamtani expects Novavax shares to shoot right back up, and eventually reach $305 a share within a year, justifying a “buy” rating on the stock.
As Mamtani explains, the advisory committee’s anti-booster recommendation Friday was both “overwhelmingly” negative — the vote was 16 to 2 against recommending booster shots — and “highly controversial.” Mamtani notes that the vote appeared to be based on worries over certain “confounding factors, such as Delta variant and behavioral patterns (masking, social distancing) among vaccinated/unvaccinated individuals,” along with “relatively limited data supporting benefit/risk of booster in the general population.”
Taken as a whole, this convinced the committee to recommend approving boosters initially only for “use in elderly and high-risk populations” — and this recommendation was unanimous. Thus, the real upshot of the vote is that the FDA will probably take the committee’s advice and approve Pfizer’s COMIRNATY vaccine for “individuals 65+ yo and/or at high risk of developing severe COVID-19” in order to offset “waning immunity” over time from the first round of vaccines.
Then, approval for the broader population may follow.
Mamtani notes that data from both Moderna (MRNA) and Johnson & Johnson (JNJ) are also likely to support ordering up a round of booster shots for everyone at the six to eight month mark. As the weight of evidence in favor of boosters, generally, accumulates, the analyst says “we continue to like NVAX’s prospects in particular,” leading Mamtani to recommend taking advantage of the “compelling buying opportunity” provided by Novavax’s recent selloff.
The analyst points out that whatever happens between Pfizer and the FDA, Novavax is enjoying “robust… progress on multiple fronts… as it prepares for all scenarios,” has “regulation applications in India, Indonesia and the Philippines completed,” and “anticipates continuing to finalize EUA filings with additional regulatory agencies (U.K., Canada, Aus/NZ, South Korea, Japan, U.S.) in coming weeks and months.” Novavax, says Mamtani, has already shown that its “prototype vaccine works well with the variant strains” of Covid-19, while its “booster is able to boost antibody to a very high level at 6-8 months interval.”
In the U.S. in particular, the company continues to expect to sell the “vast majority” of the 110 million vaccine doses it has promised the U.S. government in H1 2022. And the company says it is on track to produce 100 million doses of its NVX-CoV2373 vaccine monthly by the end of Q3 2021, and 150 million doses monthly by the end of Q4 2021.
Finally, Mamtani notes that “NVAX is also developing vaccines specific to variants.” This may increase NVX-CoV2373’s attractiveness as a booster shot, whether used to boost immunization from its own initial round of vaccines (once approved), or used to boost the protection afforded by other vaccines from other manufacturers.
This, too, in the analyst’s view, “bodes favorably for NVAX long-term.”
Judging by the consensus breakdown, opinions are anything but mixed. With 3 Buys and no Holds or Sells assigned in the last three months, the word on the Street is that NVAX is a Strong Buy. At $290.33, the average price target implies ~30% upside potential from current levels. (See NVAX stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
