Novavax Continues to Require Patience, But It Should Pay Off

Stocks to buy

Roughly a month ago, when I last wrote about Novavax (NASDAQ:NVAX), I thought NVAX stock was sure to move upward. This stock was fresh on the heels of news that the World Health Organization (WHO) had granted the firm two Emergency Use Listings (EULs) for its Covid-19 vaccine. Novavax was also planning to reapproach the U.S. Food an Drug Administration (FDA) and begin submitting data by the year’s end. 

Source: vovidzha / Shutterstock.com

Ultimately, Novavax was successful in submitting that data on time. The submission happened just prior to the end of 2021, with the company announcing it on Dec. 31. 

In any case, though, NVAX stock prices did not move upwards like I had anticipated. Instead, prices more than halved following what was ostensibly positive news. The WHO approvals and the FDA data submission had little to no effect in stopping Novavax’s slide. 

Here’s what you should know about this stock moving forward.

NVAX Stock: Patience Is Key 

Investors have simply grown tired of playing the waiting game for Novavax to be granted Emergency Use Approval (EUA) from the FDA. Impatience leads to doubt — and doubt breeds exodus. In this case, an exodus of capital. 

However, the longer-term horizon remains important here. Timing the market is not possible. That has been born out over and over. My example of assuming Novavax was due for an imminent increase last month only adds another piece of evidence to that time-tested maxim. 

But that doesn’t mean all is lost for NVAX stock by any means. The longer horizon remains promising. Plus, projections that firm-wide revenues are set to multiply this year remain intact. The $1.38 billion in revenues slated at the company this year are still predicted to rise to $4.62 billion in 2022. That’s the same as when I wrote about Novavax a month ago.

I can’t time when the market will react to that notion. But I believe that it will sooner or later. That’s the long game and that’s patience. Fortunately, some of my peers are essentially stating the same idea in a different way.

An Echoed Sentiment

Specifically, fellow InvestorPlace contributor Mark Hake believes the FDA will ultimately grant the company EUA. It’s hard to believe that won’t immediately spike its price, if and when that occurs. 

For right now, though, NVAX stock remains undervalued. Hake puts clear metrics behind this idea. He surmises:

Moderna (NASDAQ:MRNA) trades at a forward price-to-earnings (P/E) multiple of 6.16 times, according to the average forecast of 15 analysts in a survey by Seeking Alpha. That is 77.5% higher than the 3.47 times multiple at NVAX stock […] The same thing is apparent with price-to-sales (P/S) multiple comparisons. For example, Moderna trades for 3.4 times revenue. This is 2.26 times the 1.51 P/S multiple at Novavax (i.e., it’s 126% higher.)”

Faisal Humayun, another fellow InvestorPlace contributor, also notes that approval might not be particularly important. Humayun asserts that the company’s strategy isn’t necessarily contingent on the FDA:

One bullish catalyst for Novavax is the focus in low-income countries. It’s worth noting that most of the countries in the African continent still have Covid-19 vaccination rates below 10%. Even in an endemic scenario, it would be critical to vaccinate a majority of the population […]”

Humayun also notes that the case isn’t isolated to African nations alone, citing nations across the globe. Novavax should be able to derive substantial revenue streams from those countries. 

In any case, the thrust of the idea is clear: the FDA doesn’t govern the company’s applications in those nations. Revenue streams from those countries and FDA approval have no correlation. Of course, WHO approval is important, no doubt. But Novavax has had a much easier time receiving that. 

What to Do with NVAX Stock

When it comes to NVAX stock, I’m advocating for the long game. FDA approval is likely coming in any case. That will help prices. But it isn’t particularly important from the perspective that sales will skew international anyway.

This suggests 2022 will be a strong for Novavax. Remember, prices are low — for now.

On the date of publication, Alex Sirois did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.

Articles You May Like

Autonomous Vehicles: Why 2025 Will Usher in the Self-Driving Car
Dental supply stock surges on RFK’s anti-fluoride stance, activist involvement
Data centers powering artificial intelligence could use more electricity than entire cities
Activist Ananym has a list of suggestions for Henry Schein. How the firm can help improve profits
Quantum Computing: The Key to Unlocking AI’s Full Potential?