Novavax Swings to a 1Q Loss; Shares Plunge 9%

Shares of Novavax (NVAX) fell almost 9% on Monday May 10 after the biotechnology company reported a loss in the first quarter. However, revenues topped analysts’ expectations.

Novavax’s net loss for 1Q 2021 came in at $222.7 million or $3.05 per share, compared to a net loss of $26 million or $0.58 per share in 1Q 2020. Analysts were expecting the company to report a loss of $3.60 per share.

Total revenue of $447.2 million surpassed analysts’ expectations of $233.9 million and increased significantly year-over-year from $3 million in 1Q 2020. The reason behind the leap can be attributed to higher development activities related to NVX-CoV2373.

Both research and development expenses and selling, general, and administrative costs surged drastically from $17 million to $593 million and from $9 million to $63 million, respectively, on a year-over-year basis. The massive increase in these expenses was due to the costs incurred from the development of NVX-CoV2373. (See Novavax stock analysis on TipRanks)

Novavax CEO Stanley C. Erck said, “We have secured additional manufacturing and supply agreements, expanding our global supply chain to over 10 countries. In the coming months, we look forward to delivering on critical milestones, including announcing final data from our PREVENT-19 Phase 3 trial, completing our regulatory submissions, evaluating NVX-CoV2373 in younger populations and continuing to develop our booster strategy to address the evolving COVID-19 pandemic.”

Following the 1Q results, B.Riley Financial analyst Mayank Mamtani maintained the stock’s price target of $365 (127.4% upside potential) and a Buy rating.

Mamtani commented, “We are particularly encouraged by NVAX’s prolonged negotiations with EU, in order to supply for 27 member EU countries, approaching final stages with increased visibility into delivery schedule of the 200 million doses originally agreed upon in preliminary discussions.”

The analyst added, “We are encouraged by the recent easing of restrictions for raw material supplies by U.S. government, which has also posed a barrier for CVAC for stockpile build-up (link). Importantly, we anticipate delivery to prioritized nations with committed APAs, i.e., ~300M doses across U.S., Canada, U.K., Australia, and S.K. to take precedence over the incremental supply commitment for EU and Japan.”

Novavax shares have exploded 555.1% over the past year, while the stock still scores a Strong Buy consensus rating, based on 5 unanimous Buys. That’s alongside an average analyst price target of $323, which implies 101.3% upside potential to current levels.

On top of this, TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Novavax, with 8.6% of investors increasing their exposure to NVAX stock over the past 30 days.

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