Novavax (NVAX) is working to expand use of its Covid vaccine, but NVAX stock remains under pressure in the second quarter.
XIn April, Novavax won Swiss authorization for its Covid vaccine, dubbed Nuvaxovid. It also recently asked the European Union to allow people 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 almost $4.5 billion in 2022 sales with its vaccine accounting for $3.5 billion.
Meanwhile, the vaccine is under consideration in the U.S., where many people are holding out for an alternative to messenger RNA vaccines from Pfizer (PFE) and Moderna (MRNA). Johnson & Johnson (JNJ) also sells a single-shot vaccine that uses a different technology to prevent Covid.
Still, NVAX stock remains below its 50-day and 200-day lines, according to MarketSmith.com. Shares have been under pressure as Novavax builds its manufacturing capacity and works to demonstrate the shot's purity to U.S. regulators.
So, is it time to buy or sell NVAX stock?
Fundamental Analysis Of NVAX Stock
Novavax isn't measuring up to CAN SLIM guidelines for successfully trading growth stocks.
The company has reported years of 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 $22.84.
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. But revenue surged 141%. This year, NVAX stock analysts project $4.49 billion in revenue.
The fourth quarter also disappointed. Novavax lost $11.18 per share and reported $222.2 million in sales. Losses grew year over year and were wider than calls for $1.80 per share. Sales missed views, and fell roughly 21%. For the first quarter, analysts call for adjusted income of $3.39 per share and $902 million in sales.
Savvy investors should look for companies reporting recent quarterly revenue and earnings growth of at least 20%-25%. Novavax is expected to become 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 Planned Coronavirus Vaccine
Novavax's Covid vaccine has gained authorizations from several regulatory agencies and an emergency use listing from the World Health Organization.
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.
Still, the company is working on an omicron-specific vaccine. It expects to be able to deliver shots toward the end of the first quarter.
NVAX stock has a Composite Rating of 2 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 2% of all stocks.
Shares also have a low EPS Rating of 5. The EPS Rating is a measure of profitability and, on that bar, NVAX stock is weak. (Keep tabs on IBD Digital for more on stock ratings.)
Mutual funds hold a good chunk of the biotech stock. As of March, 777 funds owned 27% 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 Authority gave Novavax $179 million to develop a flu vaccine. Nine years later, that flu vaccine succeeded 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 vaccine didn't meet its primary or secondary goals in older adults and Novavax laid off nearly 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 a reverse stock split to avoid delisting from the Nasdaq. The biotech company also sold some manufacturing facilities to Catalent (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 a Relative Strength Rating of 3. 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 3% 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.com shows. On April 18, shares were below their 50-day and 200-day moving averages.
So, Is Novavax Stock A Buy Or Sell?
As of April 18, NVAX stock wasn't showing any entries to buy, and trading below its 50-day line remains a bearish sign. 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 on Stocks Near A Buy Zone.)
On a fundamental level, NVAX stock is plagued by years of losses and its revenue remains low. That looks likely to change in the first quarter. But it will be important to see how sales perform following the launch of Covid vaccines from Pfizer, Moderna and J&J. It's also important to keep an eye on earlier-stage programs from Novavax.
As it stands, Novavax stock remains a speculative investment.
To find the best stocks to buy and watch, check out IBD Stock Lists. Make sure to also keep tabs on stocks to buy or sell.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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