Novavax (NVAX) beat third-quarter expectations in early November, but NVAX stock tumbled after the Covid vaccine maker cut its outlook for the full year.
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For the year, the company now expects $900 million to $1.1 billion in total revenue, including $475 million to $625 million from its Covid shot. At the midpoint, that’s a cut of $400 million and $500 million, respectively, from Novavax’s prior guidance. The remaining sales will come from grants and royalties.
Notably, Novavax has gained authorization for its Covid vaccine in the U.S., Europe and other regions. It also reduced liabilities by $128 million during the third quarter and slashed operating expenses this year through the third quarter by 47% compared to 2022.
But NVAX stock hasn’t closed above its 50-day moving average since September, MarketSmith.com shows.
The company is battling for share in the Covid booster shot market. Its protein-based vaccine differs from Pfizer‘s (PFE) BioNTech (BNTX)-partnered vaccine and the Moderna (MRNA) shot. Both are based on messenger RNA technology.
Uncertainty remains about Novavax’s future. The company makes just one product, its Covid shot, though it also is working on vaccines to block the flu and malaria. The company hopes to reduce its costs by 20% to 25% this year vs. 2022, and by 40% to 50% next year.
So, all in all, is NVAX stock a buy or a sell right now?
Fundamental Analysis Of NVAX Stock
In the third quarter, Novavax lost $1.26 per share and reported $187 million in sales. That beat forecasts for a loss of $2.22 per share and $115.4 million in sales, according to FactSet.
Sales tumbled 75%, but losses narrowed year over year.
But neither metric is in line with savvy investing advice, which suggests investors seek stocks with at least 20% to 25% recent sales and earnings growth. Stocks with records like Novavax’s are considered speculative.
In the fourth quarter, NVAX stock analysts expect a per-share gain of 16 cents. On an adjusted basis, they expect a 60-cent loss. They call for losses in the first, second and third quarters of 2024. Losses are common for early-stage biotechs as they invest in research and development — but they’re not desired from a technical perspective.
Also this quarter, analysts call for Novavax to generate $397 million in sales, up 11% year over year.
Last year, the company had a per-share loss of $8.42, continuing a long-running trend. Sales surged 73% to $1.98 billion. Losses are expected to shrink this year to $3.65 per share. On an adjusted basis, analysts expect a per-share loss of $4.43, down from a loss of $6.75 per share last year.
But sales are also expected to shrink down to $1.07 billion.
Novavax’s Covid Vaccine
Novavax offers an alternative for people uneasy with the mRNA technology.
Like Pfizer’s and Moderna’s vaccines, Novavax’s carries a warning against the risk of myocarditis and pericarditis — forms of swelling in and around the heart.
These incidents of heart inflammation have occurred mostly in boys and young men. In Novavax’s study, six cases occurred in vaccine recipients and one took place in the placebo group. Of those six, five took place in males. Four were in people younger than age 30.
Earlier this year, Novavax said its updated vaccine elicited antibody responses capable of handling a variety of strains, including several XBB subvariants as well as at least one EG.5, also called eris, variant.
NVAX stock has a Composite Rating of 19 out of a best-possible 99. The Composite Rating is a 1-99 measure of a stock’s technical and fundamental growth metrics. On this measure, NVAX stock ranks in the bottom quarter of all stocks.
Shares also have an EPS Rating of 64. The EPS Rating is a measure of profitability and, on that bar, NVAX stock outranks 64% of all stocks. (Keep tabs on IBD Digital for more on stock ratings.)
Mutual funds hold a good chunk of the biotech stock. As of September, 281 funds owned 40% of Novavax stock. Institutional support is a good sign.
What Does History Say About Novavax Stock?
Novavax uses insect cells to develop molecules for vaccine development at a faster pace than the historical process, which relies on chicken eggs. Although government agencies have seen promise in that technology, NVAX stock is plagued by some high-profile disappointments.
In 2011, the U.S. Department of Health and Human Services’ Biomedical Advanced Research and Development Authority gave Novavax $179 million to develop a flu vaccine. Nine years later, that flu vaccine succeeded in the final-phase test. The next day, Novavax stock popped 4%.
But its vaccine to treat respiratory syncytial virus hasn’t had the same luck. The biotech company received $89 million from the Bill & Melinda Gates Foundation in 2015 to develop the vaccine. A year later, the vaccine didn’t meet its primary or secondary goals in older adults and Novavax laid off nearly a third of its staff.
Novavax stock ended 2016 with a spectacular downfall. Shares plummeted 85% that year.
In 2019, the respiratory syncytial virus vaccine failed in pregnant women and Novavax announced a reverse stock split to avoid delisting from the Nasdaq. The biotech company also sold some manufacturing facilities to Catalent (CTLT) to raise $18 million in cash.
That year, NVAX stock plunged 89%.
Novavax has received funding from the Coalition for Epidemic Preparedness, a global alliance to stop epidemics, as well as the Gates Foundation and the U.S. government.
John Jacobs, former chief executive of Harmony Biosciences (HRMY) took the helm at Novavax. Jacobs succeeded longtime former CEO Stanley Erck.
Technical Analysis Of NVAX Stock
Novavax stock has a poor Relative Strength Rating of 8. The RS Rating pits all stocks, regardless of industry group, against one another in terms of 12-month price performance. On this measure, NVAX stock outranks only 8% of all stocks. Leading stocks tend to have RS Ratings of at least 80.
NVAX stock isn’t currently forming a definitive chart pattern, MarketSmith.com shows. Shares remain below their 50-day and 200-day moving averages.
So, Is Novavax Stock A Buy Or A Sell?
Novavax stock is not a buy. Shares have been in decline, alongside the broader biotech market, since early 2021. NVAX stock is not forming a chart pattern for investors to watch, nor is it above its key moving averages.
Further, Novavax reported continued losses and a steep decline in sales in the third quarter. And its future remains speculative.
(Keep an eye on Stocks Near A Buy Zone.)
On a fundamental level, NVAX stock is plagued by years of losses. It will be important to see how sales perform amid declining demand for Covid vaccines.
To find the best stocks to buy and watch, check out IBD Stock Lists. Make sure to also keep tabs on stocks to buy or sell.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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