Since the onset of the pandemic in 2019, investors have paid special attention to pharmaceutical companies engaged in vaccine manufacturing and Novavax (NASDAQ:NVAX) has been making strong moves through the pandemic. Those who bought NVAX stock early have also taken home profits.
NVAX stock has fallen from the peak which makes it a great opportunity to add to your portfolio. The stock was once as high as $331 in February 2021 and is currently down to $128.88 as of the afternoon of May 14, 2021.
There are two reasons to keep the stock on your radar: the strong fundamentals and a massive market for the coronavirus vaccine. With that in mind, let’s dig deeper into the investment case for NVAX stock.
Strong revenue numbers
NVAX stock has been testing out the coronavirus vaccine in the U.K. and Africa. With positive results from the trial, the vaccine could generate massive revenue for the company in the year.
The company recently released first quarter earnings and reported a net loss of $223 million as compared to the loss of $26 million in the same quarter previous year. The revenue for the quarter stood at $447 million which was only $3 million the previous year. The revenue was due to the development of Covid vaccine candidate, NVX-CoV2373 which also led to an increase in the research and development expenses that reached $593 million as compared to $17 million in 2020. It reported an EPS of $3.05 which is better than the analyst estimate of $3.60.
Novavax has $2 billion in cash and the net cash generated in the first quarter was $663 million. The company has received $772 million in payments under the advance purchase agreements which were recorded as deferred revenue.
The company has adequate liquidity to invest in further research and development activities. The fundamentals have gained strength this year and the revenue could only go higher as the demand for its vaccine builds up.
NVAX Stock: Large market potential
NVAX stock is a strong buy for the wide coronavirus vaccine market, and the demand is only going higher. The company could produce and sell doses until next year, which can take revenue numbers to a new high. According to Globalnewsire, the size of the global coronavirus vaccine market will be worth $25 billion by 2024.
The company does not expect to seek regulatory authorization for the vaccine in the U.S., Europe, or Britain until the third quarter. This led to a significant decline in the stock recently.
The demand for the vaccine may be declining in the U.S. but there is a constant rise in demand from India and South America, where the vaccination rates are low and the battle against the virus is still going on. Novavax has signed a deal to supply 2 billion doses annually to India. It has also signed supply agreements with Japan and Canada.
The company will obtain revenue from overseas throughout the year.
Novavax has stated that it will produce 100 million doses of the vaccine by the end of the third quarter, and 150 million doses by the fourth quarter. It will help meet the increasing demand for vaccines and will ultimately help improve revenue and earnings.
The vaccine market is growing and the demand will continue until next year at least. If the company manages to seek regulatory authorization and ramp up production, it can certainly make the most of the pandemic.
The bottom line on NVAX stock
The recent pullback in the stock is a great buying opportunity. The company is poised for success in 2021 and already has orders for the vaccine until 2022. Novavax will generate high revenue in the coming year and the market for its flu vaccine will continue to grow. It will add value to the company and ensure strong growth in the future.
The current dip in NVAX stock is temporary and I predict the company will soon soar to new heights. The company has strong fundamentals, adequate cash balance and growth prospects to reach new highs.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.