Novavax Tumbles after Poor Q3 Results

Shares of biotechnology company Novavax (NVAX) sank 15% on Friday at the time of writing. The company’s recently announced the completion of its Emergency Use Listing (EUL) for its COVID-19 vaccine candidate, with the World Health Organization (WHO).

President and CEO of Novavax, Stanley C. Erck, said, “Today’s submission reflects our continued focus on accelerating access and equitable distribution as we work to bring our vaccine to people in need around the globe.”

Q3 Financial Performance

Novavax incurred a loss of $4.31 per share, against a loss of $3.21 per share in the same quarter last year. Analysts had expected the company to report a loss of $3.91 per share.

Total revenue of $178.8 million surged 13.9% year-over-year, but fell short of consensus estimates of $334.6 million. The upside is a result of increased development activities on NVX-CoV2373, for services performed under the U.S. government agreement, and royalties under the company’s licensing agreements.

Novavax incurred research and development costs of $408.2 million, towards the development and manufacturing of its COVID-19 vaccine candidate, up 38.8% from the same period last year. General and Administrative expenses increased to $77.8 million from $56.9 million in the third quarter of 2020.

Analyst Recommendations

Recently, B. Riley Financial analyst Mayank Mamtani reiterated a Buy rating on the stock with a price target of $305 (98.9% upside potential).

Mamtani said, “Importantly, earlier than anticipated WHO EUL, unlike the prolonged process for Ocugen’s (OCGN) COVAXIN, could put NVAX nicely on the path for 350M committed doses as part of the COVAX facility allocations.”

“As a result, we aren’t necessarily concerned with both the demand and supply of ‘2373 in the long-term and continue to believe in upward revision to Street’s 2022+ topline forecasts, while understandably recognizing certain near-term regulatory and supply dynamics to cause issues with 2021-22 revenue recognition,” analyst added.

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\Wall Street analysts are optimistic about the stock with a Strong Buy consensus rating based on three unanimous Buys. The average Novavax price target is $290.33, which implies upside potential of 89.5% to current levels. Shares have gained 99.7% over the past year.

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