Novavax (NVAX) traded around $10 per share for the first five months of the year. The stock jumped to $40 in May, moved toward $60 by June, combed to $80 by July, and topped out at $180 in August.
Though NVAX dipped after reaching $180, the stock appears to have established a floor around $80. After trading at $80 in October and November, NVAX shot right back up to $140 this December.
Where will NVAX go from here?
NVAX by the Numbers
It is hard to believe NVAX's 52-week low is $3.65. The stock is currently trading around $75 below its 52-week high of $189.40. Though NVAX does not pay a dividend, its growth potential alone is enough to entice investors. The top analysts are bullish on NVAX, setting an average price target of $188.50, meaning there is more than 63% upside to go. Of the half dozen analysts who have studied the stock, five insist it is a "Buy", one considers it a "Sell" and none advise holding.
Check out the NVAX POWR Ratings and you will find "C" grades in the Peer Grade, Trade Grade, and Buy & Hold Grade components. NVAX is ranked 119th out of more than 400 stocks in the Biotech space. NVAX has a jaw-dropping 2,862.06% price return year-to-date. However, the stock had a -89.18% price return in '19. NVAX's three-year price return is an impressive 408.15%.
Will NVAX Continue to Thrive Post-pandemic?
NVAX is the top-performing stock of the year yet some analysts question whether the company’s success will continue after the pandemic winds down, likely at some point in 2021. The bottom line is it appears as though NVAX's current trading price has future positive news already built-in. A series of glowing stories about NVAX's vaccine and other products may emerge in the months ahead yet the stock might stagnate as its current price reflects the stock's potential value years into the future.
Furthermore, the federal government offering NVAX $1.6 billion for the creation of a vaccine is the type of event that occurs once every century or so. NVAX's market share and product revenue will ultimately dictate the stock's future in the year ahead. Investors are now looking beyond NVAX's vaccine, wondering whether the company can generate steady revenue after the pandemic.
NVAX in the Year Ahead
Favorable news stemming from clinical trial data as well as regulatory authorization has the potential to help NVAX move higher in the months ahead. The company's scientists are hard at work developing a vaccine that is meant to treat both the flu and the coronavirus. This vaccine might not be available for several months or longer yet it provides a legitimate reason for hope.
NVAX's bread and butter in the year ahead will likely be its coronavirus vaccine. Revenue stemming from the vaccine could start flowing in within the first couple of quarters of the new year. All in all, NVAX has entered agreements to provide nearly 300 million vaccine doses to nations including the United States. If each dose runs $16 (the price agreed to with the US government), NVAX will be in a position to rake in more than $4.5 billion. Furthermore, NVAX has the potential to make even more vaccines than initially anticipated, possibly spiking revenue all the more in the months ahead.
The NVAX Risk
NVAX's vaccine is not yet available for use. Add in the fact that there is the potential for some stumbling block along the way and investors have cause for concern. In other words, there is a risk of the unknown. It is concerning that NVAX does not currently have an approved product that has made it to market. However, if NVAX earns FDA approval for its vaccine to combat the flu (NanoFlu), the stock should pop.
Buy, Sell, or Hold?
Your decision to buy, sell, or hold NVAX should be determined by your risk tolerance. If you are risk-averse, NVAX does not belong in your portfolio. If you embrace risk, you should consider establishing a position in NVAX, especially if current investors take the profit off the table in the days or weeks ahead. Pay close attention to the news coming out of the NVAX camp before pulling the trigger on a trade.
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NVAX shares were trading at $123.58 per share on Wednesday afternoon, up $8.21 (+7.12%). Year-to-date, NVAX has gained 3,005.03%, versus a 16.91% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.
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