By Senad Karaahmetovic

Alec Stranahan (Bank of America analyst) initiated research coverage Novavax (NASDAQ:) with an Underperform rating and a $35.00 per share price target, signaling a downside risk of 40% based on yesterday’s closing price of $58.43.

Novavax shares are down more than 60% year-to-date, driven by lower expectations regarding COVID-19, seasonal flu and tightening financial circumstances. Despite such a big drop in NVAX shares, the analyst sees “room for shares to trade lower still.”

His stance is based on “our longer-term Nuvaxovid expectations [that are]Significantly lower than consensus ($1.2B in 2024+ and -$800M consensus), due to our bearish outlook on C-19 booster use. We also consider that there is no benefit for heterologous options, unclear benefits, and decreasing immunity against new variants (i.e. Omicron). Resolution on approvability in flu, RSV, and malaria are also still open questions, with these markets becoming increasingly crowded and emerging competitor data looking strong relative to what Novavax has shown,” Stranahan told clients.

In the event of C-19 long-term sales or sales in the USA, the analyst could be mistaken. Moreover, the full approval of NanoFlu could “add another $15 to our PO.”

The Novavax stock is currently down 5.6%