NVAX Stock Forecast: Global Rollout Of Covid-19 Vaccines & Buy Rating

Viktoria VoronchukThis NVAX stock prediction article was written by Viktoriya Voronchuk – Financial Analyst intern I Know First.

Highlights:

  • Over the past month, the NVAX stock is up 69%: Investors believe Novavax is a major competitor for the vaccine from covid-19. 
  • Novavax spent $ 113,84 thousand on research and development: more than competitors in the biotech sector.
  • NVAX stock forecast for the next year will be around $145.15 according to the average growth rate for the last 8 years.

Overview

(Source:https:www.novavax.com)

Novavax, Inc. operates as a clinical-stage biotechnology company, which focuses on the discovery, development, and commercialization of vaccines to prevent infectious diseases. It produces vaccine candidates to respond to both known and emerging disease threats by using the proprietary recombinant nanoparticle vaccine technology. The firm’s vaccine candidates include ResVax and NanoFlu. It also develops immune-stimulating saponin-based adjuvants through its wholly-owned Swedish subsidiary, Novavax AB. The company was founded in 1987 and is headquartered in Gaithersburg, MD. Currently, the NVAX stock forecast is positive among many investors due to the Covid-19 vaccines.

A History of Successes and Failures of NVAX’s stock

The market for biotech companies in particular will experience extreme volatility and exposure to multiple risk factors. Stock prices are often highly volatile. The share price has been and is likely to remain highly volatile. In this regard, it is worth briefly reviewing the history of the company.

In 2011 Novavax was given $179 million to develop a flu vaccine. Nine years later, that flu vaccine succeeded in the final-phase test. The next day, NVAX stock popped 4%. But the RSV vaccine hasn’t had the same luck. 

The biotech company received $89 million from the Bill & Melinda Gates Foundation in 2015 to develop an RSV vaccine. A year later, the vaccine failed in older adults, and Novavax laid off nearly a third of its staff. Shares plummeted 85% in 2016.  In 2019, the vaccine failed in pregnant women. Novavax announced a reverse stock split to avoid delisting from the Nasdaq. That year, NVAX stock plunged 89%.  Now, all eyes are on Novavax’s efforts in Covid-19. The biotech company received $388 million from the Coalition for Epidemic Preparedness, a global alliance to stop epidemics. The Gates Foundation also gave it $15 million in July to develop a coronavirus vaccine.

Figure 1 shows that currently, the short-term moving average crosses above the long-term moving average, indicating a buy signal (golden cross). According to analysts the NVAX stock forecast to have a meaningful role in the global rollout of Covid-19 vaccines and reiterates a Buy rating on the stock.

(Figure 1 – Novavax 5 Уears Stock Price Data:Source: finance.yahoo.com)

Other biotech companies may be ahead of the curve in developing appropriate vaccines against Covid-19, but investors believe Novavax (NVAX) is a major competitor for the vaccine. Over the past month, the stock is up 69%.

Novavax & Competitors: Financial Overview 

With the aim to conclude the company’s financial condition, we should compare Novavax with several competitors. Novavax’s main competitors are Inovio Pharmaceuticals (INO) and Sinovac Biotech (SVA).

(Figure 2 – Financial Results of Novavax and Competitors 2019: Source: www.macrotrends.net)

From Figure 2, we can see that the company has the largest net loss ($ 133 million). The company’s annual revenue is 13 times less than Sinovac Biotech and 5 times more than  Inovio Pharmaceuticals for 2019. It can be concluded that in the industry as a whole, the company has positive results, but there are competitors with the best indicators.

Next, I analyzed the company’s financial performance over the past 3 years and compared with competitors for 2019.

(Table 1: Financial Results of Novavax and Competitors 2019: Source: www.macrotrends.net)
(Table 2 – Financial Rations of Novavax 2017-2019: Source: www.novavax.com)

The Novavax current ratio is 3.8:1, meaning that the company has $ 3.8 of current assets for each $ 1.00 of current liabilities. In the period 2017-2019, this indicator tends to increase. If we compare the return on equity indicator with competitors, then Novavax has the highest indicator: 71.3 profit falls on each ruble of borrowed equity. However, this indicator tends to decrease in the period 2017-2019.  The return on the investment is negative for Novavax (-98.58). This indicator is negative during 2017-2019. 

In general, especially when researching dividend stocks, yields above 4% would be acceptable for further research. Yields above 7% would be considered of high rank. It can be concluded that this indicator is better in comparison with competitors.

The role of Vaccine Portfolio for NVAX stock forecast

As for the forecast for 2021, we can see in Figure 2 below that the main indicators of income will rise. The main reason is the successful development and sale of vaccines against Covid-19. According to www.marketscreener.com, the net income indicator will increase by $1294 million in 2021. Sales will increase by 5.6 times in 2021 than in 2020.

In accordance with youth-investment-group.com, the revenue forecasts for Novavax moving into 2021 are very strong. The 2021 revenue forecasts are expected to increase 181% year on year, from $971 million in 2020 and $2.73 Billion in 2021. The lower end forecasts suggesting $1.4 Billion revenue in 2021 and higher quartile estimates closing on $4 Billion. These are impressive improvements for NVAX in comparison to its 2018-2019 results.

(Figure 3 – The Forecasts for Novavax stock: Source:www.marketscreener.com)

According to www.ft.com in Figure 4, Novavax has some of the largest vaccine pre-orders in the world. This data suggests that people have faith in this company, that it will succeed in creating vaccines. Consequently, the demand for the company’s goods will increase, profit and share prices will increase. This is a signal to buy the company’s shares.

(Figure 4 – The biggest vaccine portfolios 2020: Source: www.ft.com)

It can be concluded that negative financial indicators for this industry are normal. This industry has a large number of risks, high volatility, and it is better to consider a company for a short period of time. The net income indicator will increase by $1294 million in 2021. Sales will increase by 5.6 times in 2021 than in 2020. At the moment, the company is successfully working on the development of Covid-19 vaccines, and in the future, it has a positive forecast from many investors.

$388m Successful R&D Expense in 2020 – An Enviable Opportunity for NVAX Stock Forecast

The most commonly used metric to make a direct comparison between different biotech stocks is the amount of research and development (R&D) spending relative to sales as a percentage. It shows how efficiently a company is turning its profit into research. Competitive companies for Novavax are taken with similar R&D costs – field of vision – the creation of antiviral vaccines.

According to www.pharmtech.com, Spending on pharmaceutical R&D remains strong and consistent. For several decades, the pharmaceutical industry has spent, on average, approximately 16% of its annual revenues on R&D. 

(Figure 5 – Spending on pharmaceutical R&D from 2012 to 2026 in the world: Source: www.statista.com)

An important indicator for an investor in the biotech industry is the volume of R&D costs of the company. Investments in the biotech sector are growing every year. By 2026, costs could be near $ 223 bil. Novavax received $388 million in 2020 to stop epidemics. The successful implementation of vaccines in 2021 from NVAX should lead to high profits and will attract the attention of a large number of investors.

What is NVAX’s Price Forecast in 2021?

To predict the future value of the company’s shares, I calculated the average growth rate for the last 8 years.   If the growth rates have remained at the middle level, and the number of shares of the company will not change, then the company has a growth potential of about 15%. Consequently, the share price will be around $145.15.

(Figure 6  – Forecast of the future value of NVAX stock)

The Novavax Inc stock holds buy signals from both short and long-term moving averages giving a positive forecast for the stock. Also, there is a general buy signal from the relation between the two signals where the short-term average is above the long-term average.

(Figure 7 – Novavax 5 Уears Stock Price Data:Source: finance.yahoo.com)

At the same time, according to money.CNN, the 5 analysts offering 12-month price forecasts for Novavax Inc have a median target of 211.00, with a high estimate of 223.00 and a low estimate of 75.00. The median estimate represents a +67.13% increase from the last price of $126.25. Investors’ positive sentiment is echoed by  Riley analyst Mayank Mamtani. The analyst still expects Novavax to have a meaningful role in the global rollout of Covid-19 vaccines and reiterates a Buy rating on the stock.

Conclusion:

I take the buy-side on NVAX stock because stock holds buy signals from both short and long-term moving averages giving a positive forecast. Over the past month, the stock is up 69%. Novavax has some of the largest vaccine pre-orders in the world. R&D costs in the company are higher than of competitors.

Due to high costs in this area, Novavax is focused on a positive result in vaccines against Covid-19. The successful implementation of vaccines in 2021 should lead to high profits and will attract the attention of a large number of investors. The net income indicator is going to reach near $1294 million in 2021. Sales are going to be 5.6 times higher in 2021 than in 2020. Therefore, I consider it a good choice at these current levels and according to the average growth rate for the last 8 years, NVAX’s stock target price should be $18.9 higher and will be around $145.15.

It is worth paying attention that the stock-picking AI of I Know First has a high signal on the one-year market trend forecasts, supporting my position for the NVAX stock forecast. The light green for the short-term forecasts is mildly bullish, while the darker green is a strong bullish signal for the one-year forecast.

Past Success With NVAX Stock Prediction

I Know First has been bullish with its NVAX in the past. On September 9, 2020, the I Know First algorithm issued a bullish forecast for NVAX stock price and recommended NVAX as one of the best consumer stocks to buy. The AI-driven Novavax stock prediction was successful on a three-month horizon resulting in more than 35,06 % gain since the forecast date. See the chart below.

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Please note-for trading decisions use the most recent forecast.