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Novavax stock dives after JPMorgan downgrades shares

Yahoo Finance Live’s Julie Hyman discusses Novavax stock performance after JPMorgan downgrades its shares to Underweight from Neutral.

Video Transcript

JULIE HYMAN: It is Novavax. Really interesting call out here from JP Morgan, which downgraded the stock to underweight this morning with a $27 price target. The downgrade comes following the drugmaker's decision to slash its near-term sales forecast. And it really has to do on the viability of Nuvaxovid, which I actually didn't know even was the brand name of Novavax's COVID vaccine.

Basically, they're revising the longer term outlook for that drug, basically saying that the read of the recent vaccine dynamic in the EU and the US would suggest further guidance cuts are in the offing. Also, made in longer term headwinds to meaningful Nuvaxovid update. So all of this problematic, and that the balance sheet is not where it should be. So none of this is necessarily good news for Novavax. And the shares have been under pressure.

BRAD SMITH: Yeah, dilutive pressure throughout 2023 is also what they're seeing and underperforming their broader coverage universes of what they're really concerned about here within this particular rating in this call.

And so for Novavax, more broadly, here, even as we had seen other vaccine candidates move forward and be able to be either entered into agreements with certain nations to have some of the either priority orders or just the purchase orders, if you will, that also allowed some of them the ability to take on funds to ultimately prompt some of the research, the development that was necessary to fast track what was an extremely needed solution to combat the global pandemic, Novavax was one of the candidates that was in the rear view mirror of Merck even that eventually ended up kind of combining its candidate, or at least, its research and development, with Johnson & Johnson to be able to just produce.

Johnson & Johnson, that came after Pfizer and BioNTech and Moderna and their solutions. And so Novavax was well in the rear view mirror. And it was a question of, OK, once the vaccine finally is able to be produced in mass quantity, then where would it be dispersed to and distributed throughout the world? And what would the efficacy be? The efficacy fell far behind. And ultimately, that's where it kind of really had this stain on so much of the work that was done, but still relevant, but ultimately not able to get the same type of investor fanfare as--

JULIE HYMAN: Yeah, I mean--

BRAD SMITH: --the other players and candidates.

JULIE HYMAN: --and then some. The stock is down more than 80% year to date.

BRAD SMITH: Massive.