Can Novavax (NVAX) still a provide healthy returns? The stock is now worth less than it was in May 2020, in the early days of the pandemic. The shares, which hit an all-time high of $290 in February 2021, recently fell to a 52-week low of $8.64.
The biotech specialist is set to report fourth quarter fiscal 2022 earnings results before the opening bell Tuesday. Novavax has been clobbered even though the company’s Covid vaccine, by comparison with Pfizer (PFE) and Moderna's (MRNA), has comparable safety and efficacy and have sold in excess of $40 billion. Still, the company’s prospects for 2023 remain bright, assuming strong execution.
Marketing and selling its existing vaccine to governments as a booster shot is one area the management can focus on. While both Pfizer and Moderna vaccines have similar initiatives lined up, Novavax has a strong start, recently announcing that the U.S. government extended the partnership, ordering up to $1.5 million additional doses of its protein-based shot. The management touted the effectiveness of Nuvaxovid as a booster shot for much of the Q3 earnings presentation and with analysts.
Novavax can also focus on selling its vaccines to emerging private market, while also investing in research and development for new vaccines. Meanwhile, the company’s NanoFlu, combined NanoFlu-Covid19 vaccine could potentially go through the FDA approval process. If successful, Novavax would have acquired another revenue driver. But these are big “ifs.” Nonetheless, investors are anxious to hear a healthy does of good news on Tuesday about the company's growth expectations for 2023 and beyond.
In the three months that ended December, the Gaithersburg, MD.-based company is expected to post a per-share loss of 92 cents on revenue of $383.14 million. This compares to the year-ago quarter when the loss came to $11.18 per share on $222.2 million in revenue. For the full year, earnings the loss is expected to be $7.11 per share, compared to a year-ago loss $23.44 a year ago, while full-year revenue of $2.01 billion would rise 75.1% year over year.
Over the past thirty days, the adjusted loss estimate for the just-ended quarter has been revised upward from a loss of $1.14 per share to the current loss of 92 cents. This suggests some level of optimism about Novavax’s prospects for the new year. Part of the optimism is tied to the fact that the FDA in October granted the company with Emergency Use Authorization for its COVID-19 Vaccine, Adjuvanted, essentially serving as a booster shot for individuals 18 years of age and older.
The efficacy rate of Novavax's vaccine is reportedly at 100% in preventing moderate-to-severe disease. Meanwhile, Novavax is also being granted approval by governing bodies around the globe. This means the company can now compete with Pfizer and Moderna in follow-up shots. In the third quarter, although revenue of $734.58 million surpassed Street estimates by $180 million, the company missed on the bottom line, reporting an adjusted loss of $2.15 per share which missed by $3.79.
Operating expenses took a big chunk of revenue, coming in at $435 million. Even then, Novavax's net loss narrowed by about 50% to $168.6 million on a year over year basis. All told, while the stock price has been under heavy selling pressure, Novavax's business fundamentals are looking up. The question for Tuesday will be, how quickly can Novavax generate added revenue and can the company maintain sufficient margins to boost its bottom line?
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Richard Saintvilus
After having spent 20 years in the IT industry serving in various roles from system administration to network engineer, Richard Saintvilus became a finance writer, covering the investor's view on the premise that everyone deserves a level playing field. His background as an engineer with strong analytical skills helps him provide actionable insights to investors. Saintvilus is a Warren Buffett disciple who bases his investment decisions on the quality of a company's management, its growth prospects, return on equity and other metrics, including price-to-earnings ratios. He employs conservative strategies to increase capital, while keeping a watchful eye on macro-economic events to mitigate downside risk. Saintvilus' work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets. You can follow him on Twitter at @Richard_STv.
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