Novavax: Street Underestimating Anticipated Strong Q2 and Outlook, Says Analyst

The long-awaited emergency use authorization (EUA) for Novavax’s (NVAX) Covid-19 vaccine NVX-CoV2373 was finally granted last month, bringing to an end a journey that began early in the pandemic. For investors who had stuck it out during the long ride, it has all amounted to a bit of an anti-climax as the shares have not been the recipient of a much-needed boost after falling by 61% on a year-to-date basis.

“Boost” might indeed be an important word here, and helping to keep sentiment low, as explained by B. Riley analyst Mayank Mamtani.

“Admittedly, the challenge with the initial NVX-CoV2373 label being restricted to primary series has led to slow real-world adoption, i.e., up to 5M doses administered in total to date, but we highlight a strong demand curve building with a growing set of global regulatory approvals in booster setting, notably the EU CHMP positive opinion anticipated imminently,” the analyst explained.

More than that, however, Mamtani thinks the shares’ recent volatility, despite the past few weeks’ “unanimously positive U.S. regulatory and public health policy endorsements,” is largely due to the “fast-evolving” perception ahead of next month’s Q2 earnings (expected around mid-Aug).

Here, Mamtani thinks the Street is still mostly in “catch-up mode,” having yet to appreciate what Mamtani believes will be a “generally strong 2Q top- and bottom-line print and 2H outlook.”

In fact, via APA (asset purchase agreement) contractual commitments with ex-US/Asia developed countries such as Australia/NZ, Canada, Israel, Switzerland and the U.K., the outlook for Q3 shouldn’t be “adversely impacted.” Moreover, there’s also the potential for the EU to “meet” the outstanding 31 million doses of the 100 million initial APA commitment.

There’s also a new sense of urgency to increase vaccination rates amid expected rise in omicron BA.5 cases, which has seen management focus on boosting its global manufacturing network (SK Bio) while it executes on securing approvals. The company hopes to close the gap on mRNAs, while Mamtani also thinks the prospect of Novavax gaining traction with the unvaccinated – due to the vaccine’s more traditional tech – could be another reason for U.S. policymakers to “maintain NVAX’s vaccine in refining the vaccination strategy framework, including continued allocation of future COVID-related funding.”

All told, Mamtani sticks with a Buy rating, although there’s a tweak to the price target, which is lowered from $181 to $171. Nevertheless, there’s still upside of 208% from current levels. (To watch Mamtani’s track record, click here)

Most on the Street also remain onside; 1 Hold and Sell aside, all 7 other reviews are positive, making the consensus view here a Moderate Buy. The average target represents plenty of gains; the figure clocks in at $124.83, suggesting shares have room for ~125% upside over the coming months. (See Novavax stock forecast 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.

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