S&P 500   3,901.36
DOW   31,261.90
QQQ   288.68
S&P 500   3,901.36
DOW   31,261.90
QQQ   288.68
S&P 500   3,901.36
DOW   31,261.90
QQQ   288.68
S&P 500   3,901.36
DOW   31,261.90
QQQ   288.68

Novavax (NASDAQ:NVAX) Makes New Gains as Coronavirus Vaccine Advances

Friday, September 25, 2020 | Steve Anderson
Novavax (NASDAQ:NVAX) Makes New Gains as Coronavirus Vaccine Advances

The frantic race to be first to market with a coronavirus vaccine just got a new competitor, and that's a point that's giving many out there a cause to sigh with relief. While we've seen some of the greats hit that Phase 3 testing position, now there's one more to hit that high ceiling, and it's Novavax (NASDAQ:NVAX). With a coronavirus vaccine candidate now in Phase 3, Novavax is making new progress upward, and analysts are getting on board for the ride.

The Holy Grail of Pharmaceutical Developments

Hitting Phase 3 development is pretty much the last phase of testing, and those drugs that actually clear Phase 3 testing successfully have a fairly clear path to going live and being available for purchase. In Novavax's case, the Phase 3 tests will be particularly valid because it's staging the largest such tests seen yet. Recently, we saw AstraZeneca (LON:AZN) stage a test with 30,000 volunteers that didn't end as well as hoped after one volunteer ended up with a spinal injury. Meanwhile, Johnson & Johnson (NYSE:JNJ) staged its testing with 60,000 volunteers.

Novavax's test, meanwhile, will call on 100,000 volunteers, ranging in age from 18 to 84, and feature individuals that both have and don't have “relevant comorbidities,” the kinds of conditions like obesity and the like that may make an individual more susceptible to COVID-19. The test is set to run for the next four to six weeks, reports note, and also will be conducted with the Vaccines Taskforce element of the UK government. Novavax intends to make at least a quarter of those tested over 65 years old, in an effort to put a priority on groups most impacted by the disease.

Better yet for Novavax, if the drug ultimately ends up working, it has a partner ready to go to aid in manufacturing for wide dispersal. Endo (NASDAQ:ENDP), a generic drugmaker, has recently stepped in to manufacture the experimental vaccine. Some might consider this a case of “cart before the horse,” especially given that it's not clear that the drug actually works, but in the short term, there's still a need for 100,000 doses for the trial alone, and if the drug actually works, hitting the ground running with production-ready to go will be a valuable trait as more and more drugmakers get closer to that metaphorical finish line.

The Analysts Seem Happy, Too

For investors, though, there's got to be more afoot than a shot at a coronavirus vaccine to make it worth an investment. At least, that's likely the case from a stock currently selling at $108.18 a share as of this writing. The analyst picture suggests that's the case, as right now, there's a consensus rating of “buy” on the stock.

Reports noted that BidaskClub dropped its rating on Novavax from “strong-buy” to “buy” just a month ago, and then downgrading down to a “hold” before upgrading back to “buy”, which shows how volatile this stock can really be. Still, for right now, the consensus is leaning heavily toward “buy”. Though only six analysts are covering the stock, five of them have “buy” ratings in place while one has a “sell” rating, making it pretty clear this is a stock worth pursuing.

As for price targets, the current consensus is $159.25 a share, which is nearly 50% upside over its current price. Back in August, JPMorgan Chase & Co. upgraded Novavax from “neutral” to “overweight,” and on August 17, B. Riley reiterated its “buy” rating with a staggering price target of $257 per share.

Diversification Remains Key

If the stock were down in the $10 range or so, putting a bet on Novavax to cross that finish line ahead of other Phase 3 testing operations like Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) might make some sense. Since the stock is well over $100 a share, meanwhile, there needs to be some other element driving its gains in order to make it a worthwhile investment. Sure, there's room for more than one vaccine out there, especially if Pfizer's does come in first and that multi-dose affair that needs to be refrigerated at temperatures lower than those occurring at the South Pole gets to the front of the line. There's obvious room for a better product—like Johnson & Johnson's single-dose batch that can be refrigerated using normal refrigerators—to step in, and Novavax may have a hope there.

Still, Novavax is more that just COVID-19, with seasonal flu, Ebola, and more in the pipeline. That helps make Novavax more than a one-job shop, and improves its viability as an investment going forward. Novavax may not have the vaccine so many are waiting for, but even if they don't, there are others in play and that makes Novavax an investment to consider.

Should you invest $1,000 in Novavax right now?

Before you consider Novavax, you'll want to hear this.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Novavax (NVAX)
1.9833 of 5 stars
Pfizer (PFE)
2.7905 of 5 stars
Moderna (MRNA)
2.7017 of 5 stars
Endo International (ENDP)
1.8148 of 5 stars
Johnson & Johnson (JNJ)
2.7937 of 5 stars
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