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We feel now is a pretty good time to analyse Novavax, Inc.'s (NASDAQ:NVAX) business as it appears the company may be on the cusp of a considerable accomplishment. Novavax, Inc., a biotechnology company, focuses on the discovery, development, and commercialization of vaccines to prevent serious infectious diseases and address health needs. With the latest financial year loss of US$1.7b and a trailing-twelve-month loss of US$1.3b, the US$3.5b market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Novavax's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
According to the 7 industry analysts covering Novavax, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$1.9b in 2022. So, the company is predicted to breakeven approximately 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of -24% is expected,
Underlying developments driving Novavax's growth isn’t the focus of this broad overview, but, bear in mind that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means that a low or volatile growth rate in the near future is not unusual, especially if the company is currently in an investment period.
One thing we would like to bring into light with Novavax is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
There are too many aspects of Novavax to cover in one brief article, but the key fundamentals for the company can all be found in one place – Novavax's company page on Simply Wall St. We've also put together a list of essential aspects you should further examine:
Valuation: What is Novavax worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Novavax is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Novavax’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.