As we enter the second half of the year, pharma companies are still frantically engaged in the search for a COVID-19 vaccine. There are many companies in the mix, but it is not a level playing field, as big players are pitted against smaller names. At the onset of the pandemic, Novavax (NVAX) stood squarely in the latter camp. Facing pharma giants such as Pfizer, AstraZeneca and J&J, the small-cap biotech was at a disadvantage from the start.
However, the vaccine specialist has become a force to be reckoned with. The incredible share gains (almost 1,855% year-to-date) which have pushed the market cap up to $4.6 billion, and various grants that have significantly bolstered the balance sheet, have positioned it as a real contender. However, it shouldn’t be forgotten that Novavax is still a ways away from presenting a solution to the public.
Yet, according to H.C. Wainwright analyst Vernon Bernardino, Novavax could be well positioned to capitalize on possible future events. Following a virtual fireside chat with Novavax’s CFO, the 5-star analyst came away confident that the biotech can deliver on its promise.
“With insights gained from our mini-conference that pointed to a CoV market that is likely a sustainable long-term market opportunity, and backed by a Coalition for Epidemic Preparedness Innovations (CEPI) commitment to invest up to $388 million that significantly de-risks clinical development of NVX-CoV2373, we believe Novavax’ capability to be a robust competitor against larger vaccine makers suggests the company could realize over $400 million in annual sales of NVX-CoV2373,” said Bernardino.
Guiding the analyst’s thesis is the unfortunate fact that the coronavirus, or another virus closely related, will possibly rear its ugly head again sometime in the future. This means therapies will require “continued development.” Given the possibility SARS-CoV-2 could mutate, it is likely that “booster vaccinations, new vaccines against mutated SARS-CoV-2, as well as the availability of antiviral and antibody therapies, may be needed to prepare for future pandemics.”
Novavax’s advantage in this case, the analyst argues, is its use of vaccine adjuvants, specifically Novavax’s proprietary Matrix-M adjuvant.
Bernardino concluded, “In a situation where a significant percentage of the world’s 7 billion-plus population may need to be vaccinated, the potential of adjuvants to boost vaccine efficacy, and thus, be dose-sparing could be important if not enough CoV vaccine is available for global distribution. We look for the value of Matrix-M to continue to emerge in the months ahead.”
All in all, Bernardino reiterated a Buy rating on NVAX, while giving the price target a significant boost – up from $50 to $101. Investors could be taking home a 28% gain, should Bernardino’s thesis play out in the year ahead. (To watch Bernardino’s track record, click here)
It appears Bernardino’s fellow analysts agree. Consensus rates NVAX a Strong Buy, based on 4 Buys and 1 Hold. However, some feel the vaccine specialist has surged far enough for now, as the current average price target of $75.80 suggests shares could decline by 4% over the next 12 months. (See Novavax stock analysis on TipRanks)
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