NVAX Stock Is Not For The Faint Of Heart

Shareholders of biotechnology company Novavax (NASDAQ:NVAX) continue to ride a rollercoaster of highs and lows, and many might be wondering when they can get off the NVAX stock ride.

NVAX stock reached a 52-week high of $331.68 a share on February 8th. It then fell 54% before rebounding and climbing 70% higher. However, after peaking at $257.67 on April 27, the stock again plunged, falling 53% to a bottom of $121. Novavax’s stock is now on an upswing once again, rising 58% since mid-May to its current level of $191.85. The swings have been big, dramatic and required shareholders to hold on for dear life.

With the company’s long awaited Covid-19 vaccine now on the verge of regulatory approval, shareholders are hoping that NVAX stock will finally stabilize and move in a less erratic pattern.

Effective Vaccine

On June 14, Novavax announced that its Covid-19 vaccine, officially called “NVX-CoV2373,” proved to be 93% effective against the Coronavirus and its variants in a phase 3 clinical trial. The vaccine was 100% effective against severe versions of Covid-19. The Gaithersburg, Maryland-based company said that it will file for “Emergency Use Authorization” of its vaccine with the U.S. Food and Drug Administration (FDA) in the third quarter of this year.

By the end of 2021, Novavax says it will be producing 150 million vaccine doses a month with plans to ship them to developing countries that are struggling to secure vaccine supplies. Novavax already has signed agreements to provide more than 300 million doses of its vaccine to countries around the world, notably India where Covid-19 continues to run rampant through the population. In all, Novavax has secured about $2 billion in funding for its Covid-19 vaccine.

Late To The Party

Much of the volatility in NVAX stock is because the company is late to the Covid-19 vaccine party. Novavax has a sizable market opportunity supplying its vaccine to developing nations, and its vaccine could also be used to provide needed booster shots to people as antibodies against Covid-19 wane. However, the company has missed the opportunity to sell its vaccine to wealthy countries such as the U.S., Canada, Germany and Australia.

Novavax’s Covid-19 vaccine follows three other Covid-19 shots that have already been approved for emergency use by the FDA. Vaccines from Pfizer (NYSE:PFE), Moderna (NASDAQ:MRNA) and Johnson & Johnson (NYSE:JNJ) beat Novavax to market and have gotten the lion’s share of sales to leading industrialized nations. Federal officials in Washington, D.C. have said that they already have more than enough doses of Covid-19 vaccines to inoculate the entire American population with two doses.

To date, more than 150 million Americans have been fully vaccinated against Covid-19, according to the Centers for Disease Control and Prevention (CDC).

Beyond The Pandemic

Apart from the pandemic, Novavax is mostly known for developing vaccines against influenza (flu shots), as well as an experimental vaccine against the deadly disease Ebola that is mostly confined to sub-Saharan Africa. However, despite being in business since 1987, Novavax has never successfully commercialized a vaccine. If approved by the FDA, its Covid-19 vaccine would be the first one that the company successfully brings to market.

Novavax continues to exist largely on grants and government funding. In 2015, Novavax received an $89 million research grant from the Bill and Melinda Gates Foundation. However, the company looks to be turning things around financially thanks to its Covid-19 jab. Novavax has forecast revenue of $5.23 billion for its current fiscal 2022 year and earnings per share (EPS) of $30.21 for the entire year as well.

In this year’s first quarter Novavax reported revenue of $447 million, largely due to advanced sales of its Covid-19 vaccine. That was nearly as much as the $475 million in revenue that the company reported for all of its last fiscal year.

Buy NVAX Stock If You Can Stomach The Volatility

While Novavax is clearly on the right path with its Covid-19 vaccine, the volatility that has whipsawed the company’s stock price is not likely to end anytime soon. NVAX stock can be expected to experience peaks and valleys moving forward as investors struggle to assess how beneficial the Covid-19 vaccine will be for the company. In the next two years, NVX-CoV2373 will surely help improve the company’s finances. But long-term, Novavax’s pipeline of potential products is thin. 

Investors should only buy NVAX stock if they can stomach the volatility that comes with it. The median price target that analysts have on Novavax stock is $272 a share, which would be 40% higher than where the stock is currently trading. The high estimate on the stock is $294 per share.

Disclosure: On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.