The stock fell on Friday after receiving a sell-equivalent rating – the first since December 2020 and the only one from Wall Street.
Bank of America Securities Analyst Alec Stranahan Launches Coverage
) In an underperform rating on Friday, with a ্যের 35 price target. The stock was down 5% at $ 55.50 on Friday, well above its September 2021 high, when it traded at around $ 270.
Despite the pullback, Stranahan sees the stock still a place to trade less. The company’s Kovid-19 vaccine, Nuvaxovid, is in doubt.
“We’re seeing a tough commercial setup for Nuvaxovid based on a reduction in C-19 booster usage, a vague advantage as a different alternative, and a reduction in resistance to new variants,” he wrote.
There is also fierce competition from other vaccine manufacturers, including the vaccine
) Preliminary data points that vaccines developed by competitors may hold better against Omicron than Nuvaxovid, Stranahan added. If properly priced, there could be a big adoption of the vaccine in developing countries, he writes, an idea supported by the fact that the World Health Organization has the highest allotted dose to date. But he predicts that revenue from the vaccine may decline after the initial blip as more people receive the first dose of the vaccine.
Outside of the Covid-19 vaccine, Novavax’s development pipeline is “on the light side,” Stranahan wrote. Assuming that revenues from Novaxovid are declining and about $ 2 billion in fixed operating costs per year, he expects profits to be negative from 2023 to 2027 unless additional vaccines are approved.
The company’s seasonal flu vaccine, nanoflu, could eventually turn things around. He writes that as the company has focused on the Covid-19 vaccine over the past two years, it is not yet clear what benefits Nanoflu may have compared to other readily available vaccines. NovaVax, an RSV, or respiratory syncytial virus, “fell behind the pack” in making the vaccine, Stranahan added.
According to FactSet, Novavax last had a cell-equivalent rating in December 2020. Today, five out of eight analysts cover the stock rate and buy one, while two rates hold it and one – Stranahan – gave it a low weight rating.
Write to Sabrina Escobar at [email protected]