Novavax, Inc. (NASDAQ:NVAX) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. Novavax has also found favour with investors, with the stock up a whopping 133% to US$43.63 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.
Following the latest upgrade, the five analysts covering Novavax provided consensus estimates of US$11m revenue in 2020, which would reflect a stressful 40% decline on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 67% to US$1.28. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$7.2m and losses of US$2.31 per share in 2020. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.
The consensus price target rose 64% to US$43.20, with the analysts encouraged by the higher revenue and lower forecast losses for this year. 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. The most optimistic Novavax analyst has a price target of US$50.00 per share, while the most pessimistic values it at US$38.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Novavax is an easy business to forecast or the underlying assumptions are obvious.
Of course, another way to look at these forecasts is to place them into context against the industry itself. Over the past five years, revenues have declined around 6.4% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for a 40% decline in revenue next year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 24% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Novavax to suffer worse than the wider industry.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Novavax is moving incrementally towards profitability. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Novavax could be worth investigating further.
Analysts are clearly in love with Novavax at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as major dilution from new stock issuance in the past year. You can learn more, and discover the 1 other flag we've identified, for free on our platform here.
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.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.