Novavax (NVAX) stock remained bound under its key moving averages in January 2024 despite winning numerous authorizations for its Covid booster and a World Health Organization designation for its malaria shot.
XLike other Covid vaccine makers, Pfizer (PFE) and Moderna (MRNA), shares of Novavax reached their peak in 2021. As the pandemic has faded from the limelight, so too has demand for Covid shots. This has pressured all three vaccine makers.
Recently, Novavax emphasized rising rates of Covid cases and hospitalizations underscore the need for Covid vaccines. It's important to note that the company makes a protein-based vaccine, which differs from Pfizer's and Moderna's messenger RNA technology. Experts say Novavax could gain share among people who are uneasy with the newer mRNA approach.
Meanwhile, the company is working on vaccines for influenza and malaria. The World Health Organization prequalified Novavax's malaria shot to prevent the disease in children in endemic area. The pre-qualification status enables United Nations agencies to access vaccines for eligible countries.
But Novavax's future is uncertain. The company sells just one product and, in its most recent earnings release, cut its sales outlook for 2023. Novavax hopes to reduce costs by 40% to 50% this year.
So, all in all, is NVAX stock a buy or a sell in January 2024?
Fundamental Analysis Of NVAX Stock
In the third quarter, Novavax lost $1.26 per share and reported $187 million in sales. That beat forecasts for a loss of $2.22 per share and $115.4 million in sales, according to FactSet.
Sales tumbled 75%, but losses narrowed year over year.
Neither metric is in line with savvy investing advice, which suggests investors seek stocks with at least 20% to 25% recent sales and earnings growth. Stocks with records like Novavax's are considered speculative.
For the fourth quarter, NVAX stock analysts expect a per-share gain of 16 cents. On an adjusted basis, they expect a 60-cent loss. They call for losses in the first, second and third quarters of 2024. Losses are common for early-stage biotechs as they invest in research and development — but they're not desired from a technical perspective.
Also for the fourth quarter, analysts call for Novavax to generate $397 million in sales, up 11% year over year.
In 2022, the company had a per-share loss of $8.42, continuing a long-running trend. Sales surged 73% to $1.98 billion. For 2023, analysts project a per-share loss of $3.65. On an adjusted basis, they expect Novavax to lose $4.43 a share, down from a loss of $6.75 a share in 2022.
But sales are also projected to have shrunk down to $1.07 billion.
Novavax's Covid Vaccine
Novavax protein-based approach offers an alternative for people uneasy with the mRNA technology.
Like Pfizer and Moderna, Novavax updated its Covid vaccine to tackle the XBB.1.5 subvariant of omicron. But that strain didn't account for any sequenced Covid cases from Jan. 7 to Jan. 20, according to the Centers for Disease Control and Prevention. Today, a variant called JN.1 accounts for 85.7% of cases.
Novavax has said its updated shot elicited antibody responses against a variety of strains.
NVAX stock has a Composite Rating of 25 out of a best-possible 99. The Composite Rating is a 1-99 measure of a stock's technical and fundamental growth metrics. On this measure, NVAX stock outranks a quarter of all stocks.
Shares also have an EPS Rating of 64. The EPS Rating is a measure of profitability and, on that bar, NVAX stock outranks 64% of all stocks. (Keep tabs on IBD Digital for more on stock ratings.)
Mutual funds hold a good chunk of the biotech stock. As of December, 257 funds owned 42% of Novavax stock. Institutional support is a good sign.
What Does History Say About Novavax Stock?
Novavax uses insect cells to develop molecules for vaccine development at a faster pace than the historical process, which relies on chicken eggs. Although government agencies have seen promise in that technology, NVAX stock is plagued by some high-profile disappointments.
In 2011, the U.S. Department of Health and Human Services' Biomedical Advanced Research and Development Authority gave Novavax $179 million to develop a flu vaccine. Nine years later, that flu vaccine succeeded in the final-phase test. The next day, Novavax stock popped 4%.
But its vaccine to treat respiratory syncytial virus hasn't had the same luck. The biotech company received $89 million from the Bill & Melinda Gates Foundation in 2015 to develop the vaccine. A year later, the vaccine didn't meet its primary or secondary goals in older adults and Novavax laid off nearly a third of its staff.
Novavax stock ended 2016 with a spectacular downfall. Shares plummeted 85% that year.
In 2019, the respiratory syncytial virus vaccine failed in pregnant women and Novavax announced a reverse stock split to avoid delisting from the Nasdaq. The biotech company also sold some manufacturing facilities to Catalent (CTLT) to raise $18 million in cash.
That year, NVAX stock plunged 89%.
Novavax has received funding from the Coalition for Epidemic Preparedness, a global alliance to stop epidemics, as well as the Gates Foundation and the U.S. government.
Technical Analysis Of NVAX Stock
Novavax stock has a poor Relative Strength Rating of 6. The RS Rating pits all stocks, regardless of industry group, against one another in terms of 12-month price performance. On this measure, NVAX stock outranks only 6% of all stocks. Leading stocks tend to have RS Ratings of at least 80.
NVAX stock isn't forming a definitive chart pattern as of Jan. 25, MarketSmith.com shows. Shares remain below their 50-day and 200-day moving averages.
So, Is Novavax Stock A Buy Or A Sell In January 2024?
Novavax stock is not a buy in January 2024. Shares have been in decline since early 2021. NVAX stock is not forming a chart pattern for investors to watch, nor is it above its key moving averages.
Further, Novavax reported continued losses and a steep decline in sales in the third quarter. And its future remains speculative.
(Keep an eye on Stocks Near A Buy Zone.)
On a fundamental level, NVAX stock is plagued by years of losses. It will be important to see how sales perform amid declining demand for Covid vaccines.
To find the best stocks to buy and watch, check out IBD Stock Lists. Make sure to also keep tabs on stocks to buy or sell.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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