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Novavax earnings: What to expect given encouraging Covid-19 vaccine progress

Investors had piled into biotech play Novavax following a string of positive developments for its potential Covid-19 vaccine.

  • Novavax Inc (Nasdaq: NVAX) share price falls to US$244.27 per share
  • The US biotech is set to report its first-quarter results on 10 May 2021
  • SK Bioscience will produce 40 million doses of Novavax’s Covid-19 vaccine for South Korea
  • Buy and sell NVAX stocks with an IG account

What drove the strength in NVAX’s stock?

Shares of US-based drugmaker Novavax - which creates vaccines for serious infectious diseases - tumbled 5.2% on Wednesday to US$244.27.

The clinical-stage biotech is developing a Covid-19 vaccine candidate, NVX-CoV2373, which is not yet authorised for use in the US.

Its shares had leapt 16.3% between last Monday (19 April 2021) and this Tuesday (27 April 2021), before losing steam amid apparent profit-taking by investors.

Fuelling market enthusiasm over the past week was a slew of positive news, including brief supportive comments from US President Joe Biden. The company also highlighted positive clinical-trial data for a malaria vaccine candidate.

What are the forecasts for Novavax’s 1Q earnings?

On 10 May 2021, Novavax will report its financial results for the first quarter of this year.

Research teams are expecting net loss per share to come in at US$3.042 for 1Q 2021, according to estimates compiled by Bloomberg. That is worse than Novavax’s loss per share of US$2.70 in the previous quarter and US$0.58 in the year-ago period.

Revenue could amount to US$234 million for this January-March, analysts believe, decreasing 16.4% quarter-on-quarter but jumping significantly year-on-year from US$3.4 million in 1Q 2020.

Six analysts recommended ‘buy’ on NVAX shares, one said ‘hold’, with none giving ‘sell’ calls. Their average 12-month target price was US$332.50, Bloomberg data showed. That translates to potential gains of 36.1% based on Wednesday’s close.

Vaccine ramp-up, Biden comments boosted NVAX shares

Novavax shares climbed 16% on Tuesday, after Biden briefly mentioned the company in his comments about the US planning to share Covid-19 vaccines with other countries.

‘The problem is right now we have to make sure we have other vaccines like Novavax and others coming on, probably,’ the president said.

Also on Tuesday, US Trade Representative Katherine Tai discussed increasing the production of Covid-19 vaccines with Novavax executive vice president John Trizzino.

In 2Q 2021, Novavax will report results from the Phase 3 study in the US and Mexico for its coronavirus vaccine candidate. This could provide a potential short-term catalyst for NVAX shares, said B. Riley’s head of healthcare research Mayank Mamtani, who maintained a ‘buy’ rating with a US$365 price target.

If the data is positive, Novavax should be able to file for Emergency Use Authorization in 2Q 2021, which will allow the product to enter the US market in late 2Q or 3Q this year, Mamtani wrote.

Meanwhile in South Korea, Novavax CEO Stanley Erck met the country’s president Moon Jae-in this week to talk about vaccine cooperation.

Contract manufacturer SK Bioscience intends to start producing the Novavax Covid-19 vaccine once approval is obtained, and will manufacture 40 million doses to supply South Korea.

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