It hasn’t been easy for investors holding Novavax (NASDAQ:NVAX) over the past year. While other coronavirus vaccine contenders have performed very well, NVAX stock has by-and-large traded sideways.
But now, investors are souring on this space. If that’s not bad enough, fears are mounting that the company will continue to face challenges finding success with its vaccine candidate. Even as it makes progress with regulators around the globe. As a result, shares have seen a sharp slide in price since late December.
Is it time to throw in the towel? Not so fast. I admit that, in the short-term, the stock will likely stay volatile. However, it’s not yet out of the running when it comes to helping the world resolve this global health crisis. With this, the stock’s recent weakness may be an opportunity to buy in at a more than reasonable entry point.
I’m not saying this is a low-risk play. Far from it, as shares could experience another severe drop in price, if NVX-CoV2373 (its candidate) fails to become widely used. Yet take into account its recent regulatory success around the world, and its expected rollout of its vaccine overseas this year. Not only that, there’s still potential to find success bringing its candidate to the U.S. market. Put it all together, and there is big upside potential, if today’s concerns about it prove to be overblown.
The Latest With NVAX Stock
Based on its recent performance, you’d think that Novavax had experienced only setbacks over the past month. But this selloff comes after the company announced a spate of positive news.
First off, the European Medicines Agency (EMA) gave the go-ahead for Novavax’s candidate. This paves the way for it to provide up to 200 million doses of its vaccine to the European market, representing billions in potential sales.
Also, its candidate received an Emergency Use Listing (EUL) from the World Health Organization (WHO). To top things off, besides making progress overseas, it has made big progress bringing its candidate to the U.S. market. Filing its Covid-19 vaccine data with the Food and Drug Administration, it will soon submit is Emergency Use Authorization (EUA) application.
All in all, things for the company are moving in the right direction. So, you may be wondering, why is NVAX stock moving in the wrong direction? Even with its regulatory progress, investors are doubtful that the company will overcome its manufacturing hiccups. They’re also doubtful that there’s enough demand for another vaccine in the developed world.
Why Recent Worries May Be an Overreaction
Again, the market’s issues with Novavax are twofold. First, there’s the concern that while it’s now getting authorization to roll out its vaccine, it’s entering an oversaturated market. Second, that the company will continue to be hit with delays getting its U.S. and European production sites online, which could hurt its ability to deliver results in line with expectations.
In short, it’s understandable why so many are hitting the sell button on NVAX stock right now. Still, I believe that what we are seeing now is an overreaction. I wouldn’t say the global market is oversaturated. Like I’ve discussed before, Novavax has plenty of opportunity to combat the pandemic across the world, not just in Europe and North America.
Even in the developed world, where vaccination rates are already high, there may still be more than enough demand. Those hesitant to take an MRNA-based vaccine may opt for this company’s protein-based alternative. The company may also find high demand for a booster that targets the omicron variant.
As for the second concern? This may be overblown as well. Despite the recent negative reports, the company is still confident it can hit its 2022 production target of 2 billion doses. Also, keep in mind that the company has gotten over many of the scaling issues it was experiencing throughout 2021.
The Bottom Line on NVAX Stock
Earning a “B” rating in my Portfolio Grader, you can expect Novavax to continue trading wildly. Yet if you stomach this volatility, it may well be worth it in the end.
Internationally, the company has a strong chance of generating billions in revenue over the next twelve months. When it comes to the U.S. market, I’ll admit it’s still up in the air. But given its success securing the regulatory go-ahead from the EU and WHO, I wouldn’t discount its chances of getting the green light from the FDA.
Put simply, NVAX stock has big upside potential. If/when the uncertainty surrounding it today starts to clear up.
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