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Novavax, Inc. (NASDAQ:NVAX) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. 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$418m and a trailing-twelve-month loss of US$615m, the US$11b market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Novavax's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
According to the 5 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$2.5b in 2022. So, the company is predicted to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 67%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Novavax's growth isn’t the focus of this broad overview, however, bear in mind that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 31% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
There are key fundamentals of Novavax which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Novavax, take a look at Novavax's company page on Simply Wall St. We've also put together a list of important factors you should further research:
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.
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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