Novavax (NVAX -0.51%) has gone from being a comparatively unknown healthcare firm to being some of the well-liked vaccine makers on the planet at the moment. Though buyers could also be discouraged by the inventory’s efficiency over the previous yr, when a wider vary, heading again to 2020, it has been a formidable run for the corporate. Beneath, I am going to take a look at how a lot a $1,000 funding again then could be value at the moment and whether or not it is value taking an opportunity on the inventory proper now.
The inventory was buying and selling round $4 firstly of 2020
On Jan. 2, 2020, shares of Novavax closed at $4.49. Investing $1,000 into the inventory on the time would have enabled you to amass roughly 223 shares of the corporate. This was earlier than the pandemic and earlier than the corporate’s profitable COVID-19 vaccine could be in growth.
On Monday (Jan. 9), the healthcare stock closed at $12.12, which might put the worth of these shares at $2,702.76, for a return of 170%. And that is with the inventory crashing a mammoth 93% final yr. The ethical of the story is that on the subject of biotech, shopping for early can imply important returns and volatility. But it surely does not at all times work out so properly, as there’s additionally loads of danger in investing in unproven biotech shares. On the time, Novavax was coming off a yr in 2019 when income was simply $18.7 million (primarily coming from grants), and its internet loss was $132.7 million.
The place the inventory is at the moment
Over the trailing 12 months, Novavax has generated just below $2.4 billion with its COVID-19 vaccine, NVX-CoV2373, bringing within the bulk of its income. Nonetheless, issues have not gone easily for the corporate; final yr, the corporate slashed its forecast in half for 2022. Beforehand, it was projecting between $4 billion to $5 billion in income, and that determine will now be round $2 billion. And even regardless of the expansion, the enterprise stays unprofitable, with its internet losses totaling a staggering $1.3 billion over the previous 4 quarters.
Wanting forward, the future is hazy for Novavax because it has no different accepted product moreover NVX-CoV2373. And there is much more uncertainty now that there’s a change in management at Novavax.
On Monday, the corporate introduced that CEO Stanley Erck could be retiring this month. Erck has been within the place since 2011. John Jacobs, who’s presently with Concord Biosciences, will take over and can “convey a recent perspective and deep trade experience to Novavax.” Though Concord has generated much less income over the previous 4 quarters ($400.8 million) than Novavax, its market cap is $2.7 billion — that’s greater than double the $1 billion Novavax is value at the moment. Along with Concord, Jacobs additionally beforehand labored in a senior management place with Teva Prescribed drugs.
Do you have to purchase Novavax inventory at the moment?
Novavax stays a dangerous purchase proper now. Whereas the inventory’s COVID-19 vaccine has been successful, how a lot demand there might be for it sooner or later is an unknown that makes Novavax an untenable possibility for risk-averse buyers. Even when there’s a resurgence this yr in COVID instances and income from booster pictures helps make it a better-than-expected yr for Novavax, that probably will not be a sustainable income for the lengthy haul, which is a key purpose buyers have been bearish on it of late.
Underneath new management, there could also be a special technique (e.g., specializing in acquisitions), nevertheless it’s far too early to inform at this stage if there might be a big change in course for the corporate. And for that purpose, I would counsel taking a wait-and-see method, given the inventory’s volatility.