Positioned for Further Rally By TipRanks
The COVID-19 vaccine market in developed economies is dominated by the likes of Pfizer (NYSE:) and Moderna (NASDAQ:). These companies enjoy an advantage as early-mover.
The vaccination campaign is not over. The global vaccine alliance (GAVI) estimates that 80% of people in countries with high and higher incomes have had at least one shot of vaccine. This is even worse for countries with lower and middle incomes. This means that only 20% have received at least one dose.
As the focus shifts to equitable distribution of the vaccine, Novavax (NASDAQ:) seems to be a prime beneficiary.
NVAX stock is up 80.3% year to date for 2021. (See NVAX stock charts on TipRanks)
With vaccine deliveries around the corner, further stock upside seems likely. Novavax is at an inflection point for growth and I believe that this makes me bullish.
Focus on Low-Income Countries
Novavax is a leading contributor to the World Health Organization-backed COVAX initiative. Novavax has committed over 1.1 billion doses to its vaccine.
Novavax and Serum Institute of India submitted a request to the World Health Organization last week for the emergency use of the vaccine. Separately, the company applied to emergency approval with Indian, Indonesian and Philippine authorities.
It’s also worth noting that Novavax has advance purchase agreements for approximately 400 million doses of the vaccine. This is with Canada, Australia (Canada), Switzerland, Australia, and the United Kingdom. The company has also recently signed an agreement for the supply of 150 million vaccine doses to the Japanese government.
Novavax is able to order from all developed countries. This is the key. A significant pipeline boost is possible from low income countries. This gives strong cash flow and revenue visibility through 2022.
Paving Way for Long-Term Growth
Novavax also seems to be positioning itself for long-term cash flows. These two factors could play an important part.
One booster dose of the drug has shown four-fold growths in neutralizing antibodies levels. The booster dose should provide potential for additional revenue, with encouraging results.
Novavax also has initiated Phases 1 and 2, which will test the combination of COVID-19 and seasonal influenza vaccine. This could be an avenue for long-term income from the vaccine if there are positive results.
It’s also worth noting that as of Q2 2021, Novavax reported cash and equivalents of $2.1 billion. It’s likely that the company’s cash position will swell further in 2022.
Novavax is well-positioned to do so, as it has many candidates that are in different stages of clinical trials. It has the financial flexibility to invest in multiple vaccine candidates.
Currently, the company’s pipeline is for therapeutic areas that include seasonal influenza, respiratory syncytial virus, Ebola virus, Middle East Respiratory Syndrome and Severe Acute Respiratory Syndrome.
Wall Street’s Take
According to TipRanks’ analyst rating consensus, NVAX stock comes in as a Strong Buy, with three Buys assigned in the past three months.
NVAX stock has a price target average of $290.33, which represents a 40% upside potential from the current level.
From a manufacturing and supply perspective, Novavax is well positioned. The company plans to double its production to 150,000,000 doses per month in Q4 2021.
Novavax also has a license agreement with SK Bioscience and Takeda. The company has the ability to fulfill the backlog of orders in 2022 and beyond.
NVAX stock will likely trend higher after the World Health Organization approves it. Stock upside potential is also provided by the pending approval of emergency use authorization with the United States.
Disclosure: Faisal Humayun didn’t hold any positions in the securities listed in this article at the time it was published.
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