Novavax (NASDAQ:NVAX) has had an incredible run over the last year and a half, jumping from $4 a share in January 2020 to a recent price of $200. Is the stock still a buy? What’s the long-term future for this vaccine biotech?
Corinne Cardina, bureau chief of healthcare and cannabis for the Motley Fool, and Fool.com writer Taylor Carmichael discuss the future of Novavax stock. This Fool Live clip was recorded on June 18.
Corinne Cardina: Slido question for you, from Bhanu, “Is Novavax stock a buy today? What are the long-term prospects in a year or two once COVID-19 calms down?”
Taylor Carmichael: That’s a very good question. I do think it’s a buy. It’s had an incredible run. I mean, the stock was trading in January last year, was trading at $4 and now it’s a little under $200. It’s had an amazing run, it’s a $14 billion company. They are going to be one of the major COVID-19 vaccine providers in the world. Moderna, Pfizer, Novavax, maybe Johnson & Johnson, maybe AstraZeneca, but they’re definitely, Novavax is going to be major and they’re going to make a lot money, they are going to make billions of dollars from this vaccine. What we don’t know is how much we’re going to have to continue to vaccinate over COVID-19, and that’s a question of mutation. If it mutates enough and it mutates every year, we’re going to have to revaccinate and revaccinate, like we do with the flu. The flu mutates all the time. Novavax is a flu specialist. They’ve also got a flu vaccine. They got, in my opinion, the best flu vaccine in the world. It hasn’t been approved yet, but they’ve got wonderful phase 3 data and they went head to head in competition with Sanofi‘s vaccine. They are the market leader in flu vaccines and Novavax just dusted them in the animal data phase 1, phase 2, and phase 3. Novavax ultimately is going to do a combination vaccine, combination flu, COVID-19.
Cardina: They hope to. [laughs]
Carmichael: Right. They’re going to do phase 1 human trial. They had positive animal data, they’re going to do phase 1 trials later this year. Flu is about a $5 billion dollar market. COVID is a massive, I mean, just unbelievably large market. What we don’t know and nobody knows really is, how big is that market going to remain? Is this going to be something that stays with us over the next decade, are we going to constantly vaccinate from COVID-19 or we are all going to build up an immunity and it just disappears? If it disappears, then this massive revenue that Novax it’s going to be more like a lump, the revenues are going to come down to earth. I think of Novavax as one of the premier vaccine companies, and the market has radically changed the valuation of vaccine companies. And we’ve seen with COVID-19 how important vaccination can be. So there are risks. What was at risk of Novavax at the beginning, $4 a share, it was execution risks. But now the risk is a valuation risk. Are there cheaper stocks out there? Absolutely. It’s one of my family’s largest holdings, Novavax. I’m a big believer in the company, I love their story. I think it’s going to be a great stock, I’m definitely a holder, and it’s expensive at $200 a share or $190, wherever it is now. But I think over the next year, I’m certain, as certain as I can be, that they’re going to get that EUA from the FDA, and then they’re going to have these magnificent numbers. I think the market is discounting that possibility, so I think in the near term, I think it’s going to be pretty fun ride for investors. Over the long term, it’s unknowable because we don’t know how COVID’s going to shake out.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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