Novavax’s [NVAX] share price has had an incredible rally over the past 12 months. On 28 February 2020, Novavax’s share price closed at $16. By the end of February 2021, it closed at $231 — a gain of almost 1860%.
Novavax’s fellow vaccine upstarts Moderna [MRNA] and BioNTech [BNTX] have shaken up the pharmaceutical sector thanks to their agility in developing viable COVID-19 vaccines where much larger rivals have faltered.
The position in which Novavax finds itself today would have been almost unimaginable in January 2020. When employees met in a bar in January last year, they were discussing their next career moves as the company only had enough cash to stay afloat for another 6 months, according to the Wall Street Journal. At the time, Novavax's share price was trading at less than $4.
Just over a year later, Novavax has a $15bn market cap thanks to investors betting on its COVID-19 vaccine candidate.
However, is Novavax's share price now overvalued or will this week's Q4 earnings deliver a shot of adrenaline to the stock?
Novavax's market cap
How is Novavax’s share price performing?
On 19 February, Novavax’s share price closed at $227, having surged in early morning trading after the drug maker agreed to provide 1.1 billion doses of its vaccine candidate for international vaccination programs.
Since then, Novavax’s share price has slipped circa 15% with some investors having taken profits. Friday saw strong trading despite this, with Novavax’s share price up 4.39% on the day — something that shareholders will no doubt hope to see continue in the run up to earnings.
Number of COVID-19 vaccination doses Novavax to provide
When does Novavax report earnings?
What makes Novavax's vaccine standout?
Novavax's COVID-19 vaccine NVX-CoV2373 is marching towards approval in the US, UK and EU. If approved, it could have the edge over the competition, with early data showing that it could offer longer-lasting protection than other vaccines.
Unlike other vaccines, it doesn't need to be refrigerated, widening its scope as an international vaccination solution. Novavax has said it's in a position to manufacture one billion doses over the next year, starting in April.
To get to this point, Novavax secured $2bn in funding from sources including the US government's Operation Warp Speed initiative. According to a transcript seen by the WSJ, CEO Stanley Erck told former US President Donald Trump: “Frankly, we need money".
What to look out for in earnings
Wall Street is expecting Novavax to post a $1.49 loss per share on revenues of $304.88m. However, since Novavax does not have any approved products on sale, analyst focus will be on any update regarding its COVID-19 candidate. The vaccine is undergoing phase III trials in the US and Mexico, while a January phase III trial in the UK showed that the vaccine had an efficacy of 89.3%.
Novavax has started to apply for regulatory approval globally, including in the US and Europe. Any timeline on regulatory approval, trial data, or rollout of the vaccine all have the potential to move Novavax's share price post-earnings.
Novavax's expected Q4 revenue
Among the analysts tracking Novavax’s share price, the stock carries an average $253.75 price target. Hitting this would see a 9.74% upside on the current price (as of 26 February’s close).
Looking at the wider picture, our thematic ETF screener shows that the Medical and Healthcare investment theme is down circa 1.85% over the past month, while the healthcare innovation theme is down circa 6.66% (as of 26 February’s close). Novavax is the second-biggest holding in the ETFMG Treatments Testing and Advancements ETF [GERM], with a 6.09% weighting as of 25 February, which itself has seen a 1.42% drop in value over the month.
This points to a potential concern that earnings from COVID-19 vaccines have now been priced into Novavax and other provider’s stocks. We’ll see how true that is this week.
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