Novavax (NASDAQ: NVAX) represents the dream investment. At the beginning of the year, you invest in an interesting biotechnology trade with less than $ 5 per share. Then, within a few months, positive research product news increases its share price. And by the end of the year, it’s the best in the entire market.
Novavax started in 2020 with $ 3.98 per share. From there, it rose more than 2,700% on optimism about its potential coronavirus vaccine as well as the promise of its candidate for flu vaccine. How much would you be willing to spend on investing $ 1,000 in Novavax in January? Let’s do math.
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About 252 shares
With $ 1,000, you would have bought approximately 252 shares at the closing price as of December 31, 2019. Today, the stock is trading at around $ 116 per share. That means your investment is worth $ 29,232. And if you had locked in your earnings at its peak of around $ 178 per share in August, you would have made a profit of $ 43,856.
Now you may be wondering what is the chance that Novavax can extend its steep rise to 2021. Over the past few days, the share prices of a number of vaccine manufacturers have declined. Investors are worried about current vaccines and vaccine candidates being protected against a new COVID-19 variant detected in the UK Modern (NASDAQ: MRNA) and Pfizer (NYSE: PFE), both authorized to sell their vaccines in the US, are optimistic. According to press reports, they have started new studies to confirm the effectiveness of their vaccination against the mutated strain. If the results of these studies are positive, coronavirus vaccine stock should bounce back. Pfizer and Moderna both said they expect their vaccines to be effective against various strains, including the latest.
In addition to the short-term issue, Novavax still has enough stock price catalysts.
In September, the company launched a Phase 3 trial in the UK for its coronavirus vaccine candidate. They expect to be able to report interim results of the study in the first quarter of 2021. These results may support their requests for emergency permits from healthcare regulators in different countries. If Novavax follows a timeline similar to that of Moderna and Pfizer, it could target EUA requests in the first quarter. This could lead to marketing authorization in the following weeks.
This week, Novavax announced the start of a second Phase 3 trial for its investigation into the coronavirus vaccine. This trial is based in the US and will enroll up to 30,000 participants.
Novavax is also preparing to seek FDA approval for NanoFlu, the investigative flu vaccine. NanoFlu has reached all primary endpoints in an important clinical trial this year, so it is reasonable to be optimistic about its chances.
Reason for long-term profits
If Novavax receives emergency authorization for its coronavirus vaccine candidate or a standard regulatory approval for NanoFlu, the shares are likely to jump right away. But beyond these two catalysts, there are reasons to expect a longer share price rise. At present, Novavax has no product revenue. So, two products that reach the commercialization phase within a short period of time will be a big deal.
But Novavax is also investigating the possibility of combining the flu and coronavirus vaccines in one shot. It can be a game changer for two reasons. First, it means less stitching. Most people prefer to get one shot instead of more. Second, for physicians and healthcare systems, a combination survey would streamline the process of vaccine administration – from transport and storage to vaccination. We must keep in mind that it is far. The company did not offer a timeline, but in October Novavax announced that it was investigating such a vaccine. This means that it still has to develop a candidate and take it through preclinical and clinical trials. According to a traditional timeline, this can take years.
Novavax’s forecast of earnings per share for the next financial year is $ 21.57. This is more than double that of rival Moderna. If Novavax does indeed reach the level or higher – and outperform peers, positive stock performance is likely to follow.
NVAX US estimates for next fiscal year data by YCharts
So there are definitely elements that could push Novavax shares higher in the coming year, which could contribute to 2020’s profits. While this is exciting, keep in mind that the stock remains risky.
The performance of Novavax’s share price in the coming year will depend on the results of the coronavirus vaccine studies. Anything can happen in clinical trials – and many drugs and vaccines do not succeed in the final stages. Bad news on the front could lower Novavax shares. This biotechnological stock offers the potential for extra large gains, but also the potential for significant losses. You should only invest in it – or maintain your current position – if you are comfortable with the idea.