The shares of Novavax, Inc (NASDAQ:NVAX) have had an impressive year, more than doubling since Jan. 1, with the 320-day moving average capturing the security's most dramatic pullback in mid-May. The security has chopped its way back up the charts, and though its latest rally lost steam just below the $280 level, there's reason to believe the equity is ready to stage another bounce soon.
To be more specific, NVAX just came within one standard deviation of its 40-day moving average after a lengthy period above the trendline. According to a study from Schaeffer's Senior Quantitative Analyst Rocky White, NVAX has seen five similar pullbacks to this moving average over the past three years. One month after these signals, NVAX was higher 60% of the time, but averaged an impressive 63.1% return in that time period. A similar move from its current perch at $226.36 would place the stock just below the $370 level, which would put it well past its Feb. 9 peak of $331.68.
Analyst sentiment has remained bullish. Of the six in coverage, four say "strong buy," compared to two "hold" ratings. Meanwhile, the 12-month consensus price target of $264.20 is a 17.2% premium to current levels.
The stock could benefit from a short squeeze as well. The 6.08 million shares sold short make up 8.2% of the stock's available float, and would take 1.17 days to cover at NVAX's average daily pace of trading.
Now looks like an ideal time to get in on Novavax stock's next move with options. The equity's Schaeffer's Volatility Index (SVI) of 79% stands higher than just 17% of readings from the past 12 months, meaning options traders are pricing in relatively low volatility expectations for the time being. What's more, the stock's Schaeffer's Volatility Scorecard (SVS) comes in at 78 out of a possible 100. This means the stock tends to outperform these volatility expectations -- a good thing for buyers.