A Novavax Bull Cuts His Price Target, Citing ‘Challenged National Sentiment’ Towards COVID-19 Vaccination

The race to be first to market with a COVID-19 vaccine is far from over. However, Novavax (NVAX), so far, is the clear winner - at least on Wall Street. Shares have surged by a barely believable 2,236% year-to-date, as investors have cheered the progress of NVX-CoV2373, the company's COVID-19 vaccine candidate.

However, as with several other coronavirus stocks, the rally has paused for a breather recently, as the latest noises coming from the sector appear to have given investors the jitters.

Pauses for Johnson & Johnson and Astra Zeneca in their respective Phase 3 Covid-19 vaccine trials due to a participant’s unexplained adverse reaction have highlighted how hard it is to get a vaccine across the finish line.

It appears that the latest move by the FDA is a requirement for extra vigilance on the safety front.

In briefing documents handed out at this week’s World Vaccine Congress (WVC) concerning the guide lines for coronavirus vaccine trials, the FDA states there is a need for safety monitoring of over 6 months should any serious and medically attended AEs (adverse events) come to the fore during trials.

B. Riley Securities analyst Mayank Mamtani believes the abundance of caution “possibly relates to the temporary pause in Ph. III trials from AZN and JNJ.”

It also has the potential to negatively impact Novavax’ progress due to a “theoretical mention of certain platforms using novel adjuvants (such as NVX-CoV2373) to require longer safety monitoring in case of SAEs.”

Ultimately, however, Mamtani believes Novavax’ offering differentiates itself from the crowd on several fronts.

“While minor delays to projected timelines are to be expected, as also noted with PFE and MRNA Ph. III readouts,” the 5-star analyst said, “We reiterate our view of '2373 standing out among the first wave of C-19 vaccine makers, particularly as it relates to likelihood of success on the basis of (1) Ph. I best-in-class immunogenicity data, (2) robust safety data generated by NVAX's platform including from the positive Ph. III NanoFlu study earlier this year, and (3) fast-follower approach to Ph. III efficacy trial execution.”

Overall, Mamtani reiterated a Buy on NVAX shares. Yet, due to “push out in U.S. market entry by one quarter and slightly reduced penetration given the challenged national sentiment towards vaccination,” the analyst cut the price target from $257 to $223. Nevertheless, the figure still represents possible upside of 140% from current levels. (To watch Mamtani’s track record, click here)

Mamtani is broadly in line with the rest of Wall Street, which has assigned NVAX 4 Buys and 1 Sell over the past three months -- and sees the stock growing about 137% over the next 12 months, to a target price of $220.80. (See Novavax stock analysis on TipRanks)

To find good ideas for healthcare stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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