Is NVAX Stock Price Forecast to Rise?

Is NVAX Stock Price Forecast to Rise? Novavax, Inc. (NASDAQ:NVAX) estimates it will receive emergency use approval from the U.S. Food and Drug Administration for its COVID-19 vaccine by May 2021. The American company already has a deal to produce 60 million doses in the UK, which will be produced in partnership with GlaxoSmithKline.

As a COVID-19 vaccine maker, obviously Novavax stock will be directly tied to the longevity of the pandemic. As pandemic stocks suffer, so too will NVAX share price. Its success will largely hinge on its approval at the FDA and in other countries for the vaccine.

Obviously, should the FDA does not approve the COVD-19 vaccine, Novavax stock could fall sharply. Just as obvious is that once FDA emergency authorization is granted, the stock should rise. While the future is hazy, we do know that any time an important vaccine is approved by the FDA, the share price of the vaccine manufacturer has generally risen, so of course Novavax is forecast to rise with that.

To get a better sense of just how high it could go, we peel back the layers to understand the company in more depth.

Novavax Nanoparticles Key To Vaccine Production

Novavax was founded in 1987 and is based in Gaithersburg, Maryland. The company focuses on developing nanoparticles to assist in vaccine research.

Nanoparticles are the latest vaccine development. They are synthetic shells that stop the coronavirus (or other viral infections) from replicating. They are attached to a spike protein and injected in our arms just like the flu shot.

In fact, the company is working on a nanoflu vaccine that could also help its stock price rise. The company was founded long before the coronavirus epidemic, and it actually earned a Bill & Melinda Gates Foundation grant of $89 million in 2015. This grant was given to Novavax to develop a vaccine for infant respiratory syncytial virus.

Unfortunately, the company has yet to achieve FDA approval for a successful treatment. This is why the stock plummeted.

It’s also why this next FDA emergency authorization is so vital to making it rise again. As discussed, FDA approval is what will ultimately make or break the company’s products.

Every medical treatment requires FDA approval, and that green light is the only way to generate any profits. Without that COVID-19 approval, Novavax stock is likely to fall sharply like it did back when it failed to receive FDA approval for prior ailments.

The company was given $384 million in grants from the Coalition for Epidemic Preparedness Innovations in May 2020. It is due to receive another $4 million if it gains this FDA approval. 

Most analysts forecast that Novavax will rise appreciably in the coming year and be awarded the second tranche.

It can not be emphasized enough that FDA approval is everything in this industry and stock prices are directly tied to it. Novavax is not an exception to this rule.

Are Novavax Revenues Rising?

Novavax is bleeding money. In the 12 months ending December 31, 2020, the company reported a net loss of $177.6 million, or $2.70 per share. This is in spite of being given free government money and stacking preorders for its vaccine while in clinical trials.

The company hopes to prove efficacy and then combine the flu and COVID shots into one. This would create a nanovaccine funnel with recurring revenue. But all of that hinges on passing through clinical trials.

Novavax is currently at early stage revenue levels and spending heavily on clinical trials around the world. It’s testing its vaccine against coronavirus variants in the UK and South Africa, along with in the US. These are the clinical trials that will determine whether the company can fulfill its preorders by government agencies.

Over the next fiscal year, NVAX revenues are forecast to rise very substantially. The expectations among analysts are that revenues will rise exponentially from hundreds of millions to almost $2 billion per quarter by year end.

Will Novavax Earnings Go Up?

Novavax earnings will go up once it receives authorization to sell its COVID-19 vaccination. The FDA is 100 percent in control of whether or not Novavax earnings go up.

If the vaccine is not approved, the earnings are expected to plummet. But there are guaranteed sales for a vaccine during a pandemic. It’s not even a question – yes earnings for a vaccine company will go up if the company’s vaccine proves effective during the biggest global pandemic anyone alive today has ever seen.

There are no other ways to say it – Novavax’s profits for the next decade hinge entirely upon clinical trials. If it passes, the company will earn more. If it can’t pass clinical trials, the company is dead in the water. It’s an all-or-nothing play.

According to analysts’ expectations, NVAX earnings per share will flip flop from negative to as much as $15 per share by the end of the fiscal year.

What Is Novavax Stock Price Forecast?

Novavax has a range of stock price forecasts. Most analysts agree it will be in the median of $317.00 in the next 12 months. The low estimates are at $285.00 while the high estimates are at $365.00. The upside potential represents an enormous upside opportunity for speculative investors willing to take a risk.

Risks to Buying Novavax Stock

The biggest risk to buying Novavax stock is that it requires clinical approval. If the company doesn’t obtain the approval in any country, it’ll be bad press and lower the stock price.

In fact, NVAX investors already experienced this in 2016 when the company failed to show efficacy for its first nano treatment. This will remain the biggest risk involved in any pharmaceutical investment.

Another potential downside is side effects stemming from the vaccine. Johnson & Johnson and Astrazeneca have already suffered significant share price drawdowns from news releases regarding vaccine side effects. Should Novavax vaccine recipients suffer similar side effects, it will most likely suffer a similar fate.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.