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Novavax, Inc. (NASDAQ:NVAX) Just Reported First-Quarter Earnings And Analysts Are Lifting Their Estimates

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Simply Wall St
·4 min read
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Novavax, Inc. (NASDAQ:NVAX) investors will be delighted, with the company turning in some strong numbers with its latest results. Results clearly exceeded expectations, with a substantial revenue beat leading to smaller losses in what looks like a definite win for investors. Revenues were US$3.4m and the statutory loss per share was US$0.58, smaller than the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Novavax after the latest results.

View our latest analysis for Novavax

NasdaqGS:NVAX Past and Future Earnings May 15th 2020
NasdaqGS:NVAX Past and Future Earnings May 15th 2020

Taking into account the latest results, the current consensus, from the five analysts covering Novavax, is for revenues of US$10.9m in 2020, which would reflect a stressful 40% reduction in Novavax's sales over the past 12 months. Losses are predicted to fall substantially, shrinking 67% to US$1.28. Before this earnings announcement, the analysts had been modelling revenues of US$7.17m 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 next 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. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. 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. Compare this against analyst estimates for companies in the wider industry, which suggest that revenues (in aggregate) are expected to grow 24% next 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 most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Novavax going out to 2024, and you can see them free on our platform here..

Even so, be aware that Novavax is showing 2 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...

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.