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While still 50% below its all-time high, Novavax (NASDAQ:NVAX) stock is showing signs of recovery.
NVAX stock appears to have hit its rock bottom of around $135 per share on Oct. 25. Since then, shares of the biotechnology company have risen to $184 at this writing and are finally trending in the right direction.
While it remains to be seen if the Gaithersburg, Maryland-based company can hold onto its recent gains, the seeming recovery in the stock price has to be a relief to investors who have continued to hold onto shares despite the persistent decline that, at one point, had the price down 63% from its 52-week high.
There has been some good news related to Novavax as of late. Indonesia recently approved the company’s Covid-19 vaccine, and more international approvals could be forthcoming by year’s end. Additionally, Novavax has said that it has the capacity to manufacture 2 billion doses of its vaccine next year, which would be an impressive ramp-up and has the potential to generate billions of dollars in revenue for the small biotech firm.
However, there is one significant problem with Novavax’s Covid-19 vaccine. It has yet to be approved by the U.S. Food and Drug Administration.
In fact, Novavax has not even applied for emergency use authorization of its Covid-19 shot with the FDA. Development of the vaccine is horribly delayed and putting Novavax far behind competitors such as Moderna (NASDAQ:MRNA) and Pfizer (NYSE:PFE). As the world focuses on issuing booster shots to people who’ve already received two doses of a Covid-19 vaccine, Novavax is still trying to get its inoculation to the point where it can apply for FDA approval
Novavax isn’t just late to the party, its vaccine looks likely to come to market when they’re putting chairs up on tables and vacuuming the ballroom carpet. This delay is the reason NVAX stock has been beaten down.
Reasons For Hope
Novavax seems to be focusing its efforts for its vaccine on markets outside the U.S. In addition to the recent approval in Indonesia, Novavax has said that it expects other approvals soon from India and the Philippines. Additionally, Novavax has said that it plans to apply for emergency use authorization from the World Health Organization, which could lead to even more countries using its vaccine, including across Africa. These countries are not as far along as the U.S. when it comes to inoculating their populations and some are desperate for Covid-19 vaccinations
A strategy that’s focused on international markets may be a smart one given that 60% of the U.S. population is already fully vaccinated and many health experts are forecasting that the pandemic will be over in the developed world in the first quarter of next year, becoming endemic at that point. While Novavax says it plans to apply for FDA approval by year’s end, there may not be a need for the agency to approve another vaccine given that the pandemic’s end is insight.
Novavax has said that, if its plans work out, it could generate $30 billion in sales from its Covid-19 vaccine next year. The company will need the revenue to improve its finances. Novavax announced a net loss of $322.4 million for the third quarter ended Sept. 30. The company has said it requires additional grants and government contracts to improve its results. Currently, Novavax trades at 10x its revenue compared to a multiple of 8x for rival Moderna.
Add NVAX Stock to Your Watchlist
People still holding shares of NVAX stock are doing so based on hope and prayers at this point. While Novavax and its Covid-19 vaccine still have potential, a lot has to fall into place for the company between now and the New Year.
If all goes well and the company generates billions in sales, shareholders will be rewarded. Any further setbacks and shareholders could watch their investment go to zero.
For now, add Novavax stock to your watchlist and be ready to buy shares when and if the company’s fortunes turnaround.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.