Since trading began on Aug. 4, Novavax (NASDAQ:NVAX) has risen and fallen dramatically multiple times, starting about 28% higher at the start of Aug. 11. As a result, it seems the tight range NVAX stock has been trading in is about to go by the wayside.
However, if it wants to return to $300, where it traded in February, it needs Wall Street analysts to get on board. Until then, I’m not sure any news, except perhaps a Food and Drug Administration approval, would do the trick.
Here’s why.
NVAX Stock in 2021
If you bought NVAX stock on the last day of 2020, you’re sitting on an over 100% gain through Aug. 5. However, if you bought six weeks later, in early February, you’d have a paper loss of 20% or more.
That’s an amazing differential that demonstrates the jury is still most definitely out when it comes to Novavax. This is despite the fact the European Commission is buying up to 200 million doses of NVX-CoV2373, a Covid-19 vaccine that’s shown an efficacy rate between 89.7% and 96%.
“As new coronavirus variants are spreading in Europe and around the world, this new contract with a company that is already testing its vaccine successfully against these variants is an additional safeguard for the protection of our population,” said Ursula von der Leyen, President of the European Commission.
“It further strengthens our broad vaccine portfolio, to the benefit of Europeans and our partners worldwide.”
American investors seem fixated on the American marketplace. InvestorPlace’s very own Joel Baglole suggested as much in his most recent commentary about Novavax.
“Wall Street has clearly grown impatient waiting on FDA approval of the company’s Covid-19 vaccine, and the product pipeline does not inspire confidence,” Baglole stated on July 31.
The reality is that Covid-19 has most likely become like a new, more deadly version of the flu, requiring ongoing booster shots in the future to maintain one’s immunity.
So, when you consider the size of the global influenza market — estimated to be $11.5 billion by 2026 — and how many companies manufacture the vaccine for it — six in the U.S. for the 2020/2021 season — it’s clear that the global market for Covid-19 is immeasurably larger.
Though the U.S. has a large market, is not the be-all and end-all. As soon as Wall Street understands this, Novavax’s share price has a better chance of moving above $300 — and staying above $300.
Wall Street’s View of Novavax
According to MarketWatch, a total of six analysts cover NVAX stock. Four analysts rate it as a “buy,” and one each rate it as “overweight” and “hold.” However, that’s actually worse than three months ago.
As for target price, the six analysts give it a median and average target of $272 and $264.20, respectively. At current prices, that’s 24% and 21% upside, respectively.
Meanwhile, over at Moderna (NASDAQ:MRNA), a total of 18 analysts cover the Covid-19 vaccine manufacturer. Eight analysts rate it a “buy,” and the remainder rate it a “hold” or worse. It’s even worse when it comes to the target price. The median and average target prices are $271.50 and $290.83, respectively, well below its Aug. 11 opening share price of $485.50.
Even though the trend for Moderna is negative, if you were to go back to this time last year, I’m sure the analysts would have presented a much different picture from today.
It seems to me that if 12 more analysts were to jump on board the Novavax story it would all but guarantee a $300+ stock price in the future.
Until that happens — or it actually delivers some vaccines to paying customers — I don’t see $300 being a realistic near-term price target. Instead, it will most likely trade in a range between $200 and $250.
If you’re a patient investor, I’d wait for it to correct into the bottom half of that range before buying.
Long-term, I find it hard to believe it will be completely shut out of the Covid-19 vaccine game.
On the date of publication, Will Ashworth 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.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.