Novavax, Inc. (NVAX), a vaccine manufacturer based in Maryland, reported its Q2 results on August 5.
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The company also announced that it has further delayed seeking approval for its COVID-19 vaccine in the United States. The immediate reaction was negative, with NVAX stock closing at $189.89 on August 6, after closing at $236.30 a day earlier.
The stock has since rallied, following several other positive developments. It seems very likely that Novavax stock is positioned for further upside. The key factors are revenue and cash-flow visibility into 2022 and beyond. (See NVAX stock charts on TipRanks)
Plenty of International Market Left for Novavax
On August 4, Novavax signed a deal with the European Commission to sell up to 200 million doses of NVX-CoV2373, its COVID-19 vaccine. It’s worth noting that NVX-CoV2373 has shown an overall efficacy of 89.7%. With the company successfully testing the vaccine against new variants, the contract is likely to get a boost in the coming quarters.
In another major development, Novavax and the Serum Institute of India have submitted for emergency-use authorization approval in India, Indonesia and the Philippines. India is a big market in particular, with less than 10% of its population fully vaccinated.
The key point here is that Novavax is targeting low-income countries to boost its revenue. There is immense scope for entry into East Asia, Southeast Asia and potentially Africa.
So, while it might seem that Novavax is a laggard in the vaccine race, the company has room to make up ground.
Novavax has also been working towards ensuring that the COVID-19 vaccine generates long-term revenue. The company has already initiated clinical trials for co-administration of NVX-CoV2373 with the influenza vaccination.
Initial results have shown that the co-administration does not negatively impact influenza-immune response. This is more good news for Novavax, in terms of sustained cash-flow potential from the COVID-19 vaccine.
As the company starts filing for emergency-use authorization, its manufacturing capacity is expected to be ramped up to 100 million doses per month by Q3 2021. Further, capacity is expected to increase to 150 million doses a month by the end of the year.
As of Q2 2021, the company reported cash and equivalents of $2.1 billion. Such a figure should provide ample financial flexibility for manufacturing expansion and investing in research and development.
Wall Street’s Take
According to TipRanks’ analyst consensus rating, NVAX stock comes in as a Strong Buy, with four Buy ratings assigned in the last three months.
The average Novavax price target is $276.50 per share, implying around 17.9% upside potential from current levels.
Concluding Views
Besides the growth potential from the COVID-19 vaccine, Novavax has an attractive pipeline. This includes potential vaccination for seasonal influenza, respiratory syncytial virus, Ebola virus, Middle East Respiratory Syndrome (MERS), and Severe Acute Respiratory Syndrome (SARS).
The cash inflow from sales of NVX-CoV2373 will provide Novavax with the flexibility to further deepen its pipeline. Therefore, there is visibility for long-term growth.
Overall, it seems that NVAX stock is positioned for further rally. For now, as more agreements are signed with various international governments, the stock is likely to react positively.
Disclosure: Faisal Humayun held no position in any of the stocks mentioned in this article at the time of publication.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.
