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Shareholders in Novavax, Inc. (NASDAQ:NVAX) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. Investors have been pretty optimistic on Novavax too, with the stock up 49% to US$140 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
Following the upgrade, the most recent consensus for Novavax from its four analysts is for revenues of US$517m in 2020 which, if met, would be a huge increase on its sales over the past 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting US$3.35 in per-share earnings. Prior to this update, the analysts had been forecasting revenues of US$436m and earnings per share (EPS) of US$3.20 in 2020. Sentiment certainly seems to have improved in recent times, with a nice gain to revenue and a small increase to earnings per share estimates.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 31% to US$129 per share. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Novavax at US$155 per share, while the most bearish prices it at US$105. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. For example, we noticed that Novavax's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow manyfold, well above its historical decline of 6.4% a year over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 25% next year. Not only are Novavax's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Novavax.
These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 2 potential risk with Novavax, including major dilution from new stock issuance in the past year. For more information, you can click through to our platform to learn more about this and the 1 other risk we've identified .
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
This article by Simply Wall St is general in nature. 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.
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