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Earnings Update: Novavax, Inc. Just Reported And Analysts Are Boosting Their Estimates

Simply Wall St

One of the biggest stories of last week was how Novavax, Inc. (NASDAQ:NVAX) shares plunged 33% in the week since its latest full-year results, closing yesterday at US$8.41. Revenues came in 58% better than analyst models expected, at US$19mwhile statutory losses per share were US$5.51, in line with forecasts. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.

Check out our latest analysis for Novavax

NasdaqGS:NVAX Past and Future Earnings, March 14th 2020

Following the recent earnings report, the consensus fromthree analysts covering Novavax expects revenues of US$7.61m in 2020, implying a painful 59% decline in sales compared to the last 12 months. Per-share statutory losses are expected to explode, reaching US$2.31 per share. Yet prior to the latest earnings, analysts had been forecasting revenues of US$3.82m and losses of US$3.12 per share in 2020. There has definitely been an improvement in perception after these results, with analysts noticeably increasing both their earnings and revenue estimates.

Yet despite these upgrades, analysts cut their price target 15% to US$13.40, implicitly signalling that the ongoing losses are likely to weigh negatively on Novavax's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Novavax analyst has a price target of US$17.00 per share, while the most pessimistic values it at US$6.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

In addition, we can look to Novavax's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. One obvious concern is that although revenues are forecast to continue shrinking, the expected 59% decline next year is substantially more severe than the 5.0% annual decline over the past five years. Compare this with our data on other companies (with analyst coverage) in a similar industry, which in aggregate are forecast to see their revenue decline 16% per year. So it looks like Novavax is also expected to see its revenues decline at a faster rate than the wider market.

The Bottom Line

The most important thing to note from these estimates is that the consensus increased its forecast losses next year, suggesting all may not be well at Novavax. Fortunately, analysts also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Novavax's future valuation.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for Novavax going out to 2024, and you can see them free on our platform here.

It might also be worth considering whether Novavax's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.