Novavax's (NVAX) first full quarter of Covid vaccine sales lagged expectations in May and NVAX stock crumbled.
Still, the company retained its full-year outlook for $4 billion to $5 billion in sales. A myriad of countries have authorized Novavax's Covid shot, known as Nuvaxovid. The Food and Drug Administration's panel of experts will meet in June to discuss the vaccine.
If authorized in the U.S., it would offer an alternative to people nervous about messenger RNA vaccines fromPfizer(PFE) andModerna(MRNA). Novavax's shot is based on older protein technology.Johnson & Johnson(JNJ) also sells a single-shot Covid vaccine.
Novavax stock remains below its50-dayand200-daylines, according toMarketSmith.com. Shares have been under pressure as Novavax builds its manufacturing capacity and works to demonstratethe shot's purityto U.S. regulators.
So, is it time to sell NVAX stock?
Fundamental Analysis Of NVAX Stock
Still, Novavax isn't measuring up toCAN SLIM guidelinesfor successfully trading growth stocks.
The company is mired in annual losses, a trend that continued last year. In 2021, Novavax lost $23.44 per share, widening from a per-share loss of $7.27 in 2020. Analysts expected a loss of $13.70 per share in 2021. This year, analysts expect Novavax to become profitable with per-share earnings of $23.89.
It's important to note, losses are common for newly commercial biotech companies — which are usually investing in research and development — but it's not desirable from a CAN SLIM perspective.
Full-year revenue was nearly $1.15 billion, below expectations for $1.26 billion. Still, revenue surged 141%. This year, NVAX stock analysts project $4.29 billion in revenue.
During the first quarter, Novavax earned $2.56 per share, minus some items. That turned around from a $3.05 per-share loss in the year-earlier period, but lagged forecasts for $2.69. Sales grew more than 57% to $704 million. But analysts predicted a more bullish $845.2 million.
For the second quarter, analysts predict adjusted earnings of $5.33 per share, which would swing from a year-earlier loss of $4.75. Sales would grow more than 235% to $999 million.
Savvy investors should look for companies reporting recent quarterlyrevenue and earnings growthof at least 20%-25%. Novavax became profitable in the first quarter. Still, stocks with a record like Novavax's are speculative for growth investors and carry a higher risk.
Novavax's Coronavirus Vaccine
Novavax's Covid vaccine has gained authorizations from several regulatory agencies and an emergency use listing from the World Health Organization. It also recently asked the European Union to allow teens age 12-17 to receive its Covid shot.
The biotech company announced its vaccine would be tested in two booster studies in the U.S. and the United Arab Emirates. Further, Novavax said its shot is now available in Canada.
Doses are now shipping to a number of geographies, including Europe, Australia, Indonesia and South Korea. The company projects $4 billion to $5 billion in full-year revenue. Analysts expect Novavax to bring in $4.3 billion in 2022 sales with its vaccine accounting for $3.86 billion.
In a Phase 3 U.K.-based study, the vaccine was 82.5% effective against all Covid. A study in teens age 12-17 found the vaccine was 82% effective against the delta variant. Further, the company says its vaccine is reactive against the omicron variant when combined with a booster shot at six months.
NVAX stock has aComposite Ratingof 23 out of a best-possible 99. The Composite Rating is a 1-99 measure of a stock's technical and fundamental growth metrics. On this measure, NVAX stock outranks just 23% of all stocks.
Shares also have a low EPS Rating of 36. TheEPS Ratingis a measure of profitability and, on that bar, NVAX stock is weak. (Keep tabs onIBD Digitalfor more on stock ratings.)
Mutual funds hold a good chunk of the biotech stock. As of March, 782 funds owned 25% of Novavax stock. Institutional support is a good sign.
What Does History Say About Novavax Stock?
Novavax uses insect cells to develop molecules for vaccine development at a faster pace than the historical process, which relies on chicken eggs. Although government agencies have seen promise in that technology, NVAX stock is plagued by some high-profile disappointments.
In 2011, the U.S. Department of Health and Human Services' Biomedical Advanced Research and Development Authoritygave Novavax$179 million to develop a flu vaccine. Nine years later, thatflu vaccinesucceeded in the final-phase test. The next day, Novavax stock popped 4%.
But its vaccine to treat respiratory syncytial virus hasn't had the same luck. The biotech company received $89 million from the Bill & Melinda Gates Foundation in 2015 to develop the vaccine. A year later,the vaccinedidn't meet its primary or secondary goals in older adults andNovavax laid offnearly a third of its staff.
Novavax stock ended 2016 with a spectacular downfall. Shares plummeted 85% that year.
In 2019, the respiratory syncytial virus vaccine failed in pregnant women and Novavax announced areverse stock splitto avoid delisting from the Nasdaq. The biotech company alsosold some manufacturing facilitiestoCatalent(CTLT) to raise $18 million in cash.
That year, NVAX stock plunged 89%.
Novavax has received funding from the Coalition for Epidemic Preparedness, a global alliance to stop epidemics. The Gates Foundation and the U.S. government also gave Novavax money to help speed its Covid vaccine efforts.
Technical Analysis Of NVAX Stock
Variant news has impacted Novavax stock.
But Novavax stock has aRelative Strength Ratingof 7. The RS Rating pits all stocks, regardless of industry group, against one another in terms of 12-month price performance. On this measure, NVAX stock tops just 7% of all stocks. Leading stocks tend to have RS Ratings of at least 80.
NVAX stock isn't currently forming a definitive chart pattern,MarketSmith.comshows. On May 17, shares were below their50-dayand200-day moving averages.
So, Is Novavax Stock A Sell?
As of May 17, NVAX stock was trading below its 50-day moving average, which is a bearish sign. It crossed that line in December, making it a sell. Also, shares aren't currently forming a new chart pattern. Investors are encouraged to buy a stock when it crosses a buy point and is within its 5% chase zone.
(Keep an eye onStocks Near A Buy Zone.)
On a fundamental level, NVAX stock is plagued by years of losses and its revenue remains low. It will be important to see how sales perform, especially if the FDA allows the vaccine. It's also important to keep an eye on earlier-stage programs from Novavax.
Further, in June the FDA will hold an advisory committee meeting to discuss Novavax's Covid shot. The company also seeks authorization to immunize teens in Great Britain.
To find the best stocks to buy and watch, check out IBD Stock Lists. Make sure to also keep tabs onstocks to buy or sell.$Novavax(NVAX)$
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