Novavax (NASDAQ:NVAX) is a prime example of a biotech company that’s seen its stock performance tied to a Covid-19 vaccine. NVAX stock was worth around $4 at the end of 2019. However, when the company announced it would be developing a vaccine in 2020, investors piled in.
At the height of the frenzy this February, NVAX stock closed at just under $320. That’s an almost unbelievable 7,900% gain in little more than a year. I say “almost” because we’ve seen this pattern before with vaccine stocks.
Novavax’s vaccine isn’t yet approved for use in the United States, but it’s currently being produced in over 20 facilities across the world. Two weeks ago, NVAX stock also got a nice boost on news that Japan would be buying 150 million doses. However, the stock has been in a bit of a slump since then. While the growth so far in 2021 is still an impressive 107%, shares are down 28% from their Feb. 8 all-time high close.
So, currently trading for around $231, is NVAX stock worth considering? Or has the ship sailed on its vaccine-fueled growth?
NVAX Stock: People Still Need to Be Vaccinated
One of the big concerns about investing in Covid-19 vaccine makers is the idea that demand for their respective vaccines will run out. At a very superficial level, this might look to be the case right now. According to the New York Times’ global vaccine tracker, over 6 billion doses have been administered worldwide.
At first glance, with a global population of about 7.9 billion, you may be thinking demand will soon drop off. In that case, the growth prospects of NVAX stock and others would be limited.
However, the reality of the matter is much different. Most Covid-19 vaccines require two doses. That means 6 billion out of nearly 16 billion doses have been administered. So, instead of fighting over the remnants, vaccine providers still have the majority of the world’s population as a market.
According to the vaccine tracker numbers, the U.S. currently has 55% of its eligible population fully vaccinated. Many countries — especially those in Africa — are nowhere near that level. Dozens of African countries including Kenya, Zambia and Somalia have less than 5% of their populations fully vaccinated.
Novavax has delayed seeking approval for use of its vaccine in the crowded U.S. market (that should now be coming in the fourth quarter). But that doesn’t mean it’s out of the game. Instead, it’s focused on the countries where vaccination is far behind. In August, CEO Stanley Erck told investors the following:
“Initially, our doses may be prioritized to low-income countries, where we’ll be able to support critical unmet demand for primary vaccinations.”
That’s expected to amount to production of 2 billion doses of its Covid-19 vaccine in 2022.
Booster Shots Are a Likely Reality
Vaccination rates are not the only thing keeping NVAX stock in the game, however.
No doubt, Covid-19 has proven to be a difficult adversary and a virus that frequently mutates. Some of these mutations may make current vaccines less effective. Plus, another unknown is how long vaccines will remain effective.
It’s very likely that we’ll face a situation similar to influenza, which requires a yearly booster shot. Matthew Frieman, an associate professor of microbiology and immunology at the University of Maryland, told National Geographic that it’s “highly likely” booster shots will be required.
Speaking of the flu, Novavax recently announced that it is trialing a combined flu and Covid-19 vaccine as well. This is the kind of innovative approach that shows the long-term growth potential for NVAX stock.
Finally, while we’ve been focused on the company’s Covid-19 vaccine, Novavax is also far from a one-trick pony. The company’s development pipeline includes candidates addressing influenza, ebola, RSV and more.
Bottom Line on NVAX Stock
So, is NVAX stock a buy at current levels?
The company’s Covid-19 vaccine is going to be a strong revenue generator over the next several years. After that, it’s likely to be an ongoing source of revenue via booster shots. And finally, in addition to that high-profile Covid-19 vaccine, Novavax has other drugs in the pipeline. Any of those candidates that are approved will help continue the momentum.
NVAX currently earns a “B” rating in Portfolio Grader. If you want a Covid-19 vaccine stock with realistic long-term growth potential for your portfolio, Novavax is a company that’s worth watching.
— Louis Navellier and the InvestorPlace Research StaffRetire Early With $3 Wonder Stock? [sponsor]
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Source: Investor Place