Novavax (NASDAQ: NVAX) has seen its stock price trade at $13 per share, significantly below its peak level of $320 in February 2021. The stock was at $51 in early June 2022 before dropping 75% following the Fed rate hikes. The company’s performance has been compared to the 2008 recession to analyze its market behavior during turbulent times. Novavax’s recent deal with Sanofi, valued at $1.2 billion, has boosted its stock by nearly 200% over a week, providing much-needed support amidst declining Covid-19 vaccine demand.
Despite the recent surge, NVAX stock has declined by 90% from levels of $110 in early 2021 to $13 now, underperforming the S&P 500. Returns for NVAX in 2021 were 28%, but plummeted to -93% in 2022 and -53% in 2023. In comparison, S&P 500 returns were 27% in 2021, -19% in 2022, and 24% in 2023. Beating the S&P 500 has been challenging for many individual stocks in recent years, with only the Trefis High Quality Portfolio consistently outperforming the benchmark index each year. HQ Portfolio stocks have provided better returns with less risk, suggesting a smoother performance compared to individual stocks.
The uncertain macroeconomic environment with high oil prices and elevated interest rates raises questions about NVAX’s future performance compared to the S&P 500. Analysts estimate an average of $18 as the price target for NVAX, reflecting over 35% upside potential from the current price of $13. This estimate considers the royalties Novavax is expected to receive from Sanofi for vaccine sales, with a possibility of higher earnings if new products utilizing Novavax’s technology are developed successfully. The company’s cash cushion should enable it to focus on in-house product development.
The timeline of the 2022 inflation shock highlights the challenges faced by the market, with the Fed taking steps to control inflation and stabilize the economy. Comparisons between NVAX stock performance and the broader market during the 2007-08 crisis show how the company has navigated through uncertain times in the past. Novavax’s revenue increased significantly in recent years, driven by Covid-19 vaccine sales, but has since decreased as demand waned. The company’s upcoming Covid-influenza combination vaccine could potentially boost its revenue.
Novavax’s financial position shows a decrease in total debt and cash over the past few years, with a negative cash flow from operations in 2023. While the recent deal with Sanofi is expected to improve its financial outlook, concerns remain about meeting near-term obligations. With the Fed’s efforts to control inflation instilling confidence in the market, NVAX stock has the potential for further gains once recession fears subside. While the recent Sanofi deal may provide a revenue boost, it is unlikely that NVAX will reach previous trading levels anytime soon.
