Can the Novavax share price soar as it ships Covid vaccines?

This content has been produced by Opto and was originally published on the Opto Blog.

US biotech company Novavax [NVAX] is expected to report an increase of 18.6% in revenue year-over-year and a rise of 33.3% in earnings when it publishes its fourth-quarter and full-year 2021 numbers on 28 February.

Novavax stock has been trading lower ahead of its upcoming results, but the shares could be boosted if the company announces further positive developments on the distribution of its Covid-19 vaccine, which recently became the fifth to be authorised for use in the UK.

Wall Street analysts forecast fourth-quarter revenue to come in at $331.8m, an uplift from $279.7m posted in the same quarter a year ago, while earnings are forecast at a $1.80 loss per share, an improvement from $2.70 loss per share in Q4 2020.

“We are excited by the significant progress made over the quarter, including our landmark milestone of gaining the first regulatory approval for our Covid-19 vaccine,” said Stanley Erck, president and CEO of Novavax, at the announcement of the company’s Q3 earnings. “With additional regulatory submissions around the world, we are prepared to deliver our vaccine globally.”

Vaccine hasn’t helped Novavax stock price

The US firm is currently rolling out two versions of its NVX-CoV2373 vaccine, with one marketed in partnership with the Serum Institute of India (Serum) under the trade name Covovax and another produced by Novavax marketed under the trade name Nuvaxovid.

Over the past few months, the company has gained approval of its vaccine in more than 30 countries, including the UK and EU member states, and by the World Health Organisation.

Despite the impressive vaccine progress, Novavax shares have been trading weaker as the omicron wave subsides.  At the close on 25 February the stock had fallen by 42.9% since the start of the year. In comparison, rival Pfizer [PFE]has declined by 18.6% and the AstraZeneca [AZN] share price has increased by 5.7%.

Last week, the company announced that it had started shipping doses of its Covid-19 vaccine, with France, Austria and Germany expected to be the first to receive the shots “within the coming days”. The news may not affect December quarter numbers but is likely to impact the company’s 2022 outlook.

Novavax’s recombinant protein vaccine uses a more established technology than mRNA, the method behind the two most widely used Covid-19 vaccines made by Pfizer/BioNTech and Moderna [MRNA]. Many have voiced hopes that Novavax’s product could convince unvaccinated people who are sceptical about mRNA tech to come forward for their shot.

Q3 earnings were a miss

The Novavax stock price took a hit when it missed third-quarter earnings in November. It posted a loss of $4.31 per share, missing analysts’ estimated loss of $3.91. The company incurred higher research and development costs relating to its NVX-CoV2373 vaccine during the three-month period.

Novavax managed to achieve capacity of 100 million doses per month as of the end of the third quarter of 2021 and said it was on track to achieve capacity of 150 million doses per month by the end of the December quarter. It expected to have capacity in excess of 2 billion annual doses in 2022.

Investors watching Novavax stock closely

The big catalyst on the horizon for the Novavax share price is the regulatory decision from the US. After a series of delays hit the stock, the biotech firm filed for emergency use authorisation of its Covid-19 vaccine with US regulator the Food and Drug Administration (FDA) last month.

With the Russia-Ukraine war at the forefront of news flow, Covid-19 might be taking a back seat for now. However, Jefferies analyst Roger Song has noted that there is still room for the vaccine producer to make its mark.

“NVAX’s CV19 vaccine has high efficacy/immunogenicity and clean safety/tolerability, as well as convenient logistics and well-validated protein-based technology,” Song told TipRanks. “As a result, we believe it could play a meaningful role in the future CV19 vaccine market.”

According toMarketScreener, four out of seven analysts rate Novavax stock as a ‘buy’, with an average price target of $215, giving the shares a potential upside of more than 163% from the current level.

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