Novavax’s (NVAX) shares gained almost 5% during regular trading hours on Thursday after the vaccine maker posted second-quarter earnings that beat analysts’ expectations. Novavax saw a sharp increase in net income, reaching $162 million compared to $58 million in Q2 2023. This jump was fueled by the Sanofi partnership, which also helped lift earnings per share (EPS) to $1.89, up from $0.73 in the same quarter last year, beating analysts’ consensus estimate of $1.67.
Novavax’s Financial Highlights
Additionally, the biotechnology company’s earnings give us an idea that this is a company focused on strategic partnerships and tightening its financial belt. The company reported $415 million in revenue, just shy of the $424 million it pulled in during the same period last year. However, a $570 million boost from its partnership with Sanofi, including a $500 million upfront payment, significantly bolstered its financial standing.
On the cost side, the company reported $46 million in sales costs, down from $56 million a year ago, due to lower expenses related to obsolete inventory. Novavax also made progress on cost control, reducing combined R&D and SG&A expenses by 34% year-over-year, with R&D costs dropping to $107 million from $219 million.
NVAX’s Pipeline
Beyond the immediate financials, Novavax is making strides with its product pipeline. The company is on track to begin a Phase 3 trial for its COVID-19-Influenza Combination (CIC) vaccine later this year, with data expected by mid-2025. This trial is a key part of Novavax’s strategy to diversify its offerings and reduce reliance on single-product revenues.
In terms of operational efficiency, Novavax is executing a cost-cutting strategy that saw a 34% reduction in combined R&D and SG&A expenses compared to the same quarter last year. R&D expenses alone were slashed to $107 million from $219 million, primarily due to lower manufacturing and clinical research-related costs.
NVAX’s Forward Guidance
Looking ahead, Novavax has shared a more optimistic outlook for the rest of 2024. They expect their revenue to get a boost from the $400 million upfront payment they received from Sanofi, along with additional product sales between $175 million and $275 million in the second half of the year. The company also plans to keep cutting costs, especially in R&D and SG&A, although they expect some higher expenses due to the Sanofi deal.
Is NVAX a Good Buy?
Analysts remain cautiously bullish about NVAX stock, with a Moderate Buy consensus rating based on three Buys and three Holds. Over the past year, NVAX has increased by more than 55%, and the average NVAX price target of $21.25 implies an upside potential of 91% from current levels. These analyst ratings are likely to change following NVAX’s results today.
