Volatility is nothing new in the healthcare sector. Nonetheless, vaccine player Novavax’s (NVAX) recent spectacular moon bound rally is on another level.
The stock surged by another 147% this month, cumulatively accruing 1025% of gains in 2020. Which begs the far-fetched question: Has Novavax provided the coveted vaccine? Not yet, but it is taking some big strides towards addressing the issue.
The latest share appreciation came following news that the coalition for Epidemic Preparedness Innovations (CEPI) will commit up to $388 million to further the development of Novavax’ vaccine candidate against COVID-19 (SARS-CoV-2), NVX-CoV2373. The investment is CEPI’s biggest to date and follows on from what now feels like a miniscule initial $4 million grant to Novavax.
In tandem with setting the process of clinical trials in motion (with Phase 1/2 trial data expected by July), part of the funding will go towards ramping up production at various locations around the globe, with a target of matching the largest pharma vaccine developers’ production capacity.
Based on Novavax’ vaccine track record, Ladenburg Thalmann analyst Michael Higgins is confident in the outcome, and predicts the Phase 1/2 results “will prove to be safe.” The results are key to his thesis of Novavax’ rNPV (risk-adjusted net present value) as the data will have an impact on the “scale up activities.”
Higgins expounded, “While CEPI and Novavax are working collectively to generate the manufacturing capabilities to reach one billion doses in 2021, we are modeling the 100M doses are sold in 2021 at $10/dose, with 50% net margins. Mgt has not provided guidance on our assumptions; but given the low net manufacturing costs (especially on a large scale) we believe our assumptions are within reasonable expectations. We believe the low manufacturing margins contributed to CEPI’s decision, as it seeks to partner with innovators to treat as many global citizens as possible.”
Overall, Novavax gets 100% support from the Street, as all 5 analysts tracked over the last 3 months rate the vaccine player a Buy. With an average price target of $49.20, the analyst fraternity projects upside of nearly 10%. (See Novavax stock analysis on TipRanks)
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