1-Star Stocks Poised to Plunge: Novavax?

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, clinical-stage biopharmaceutical company Novavax (Nasdaq: NVAX  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Novavax's business and see what CAPS investors are saying about the stock right now.

Novavax facts

Headquarters (founded) Rockville, Md. (1987)
Market Cap $244.1 million
Industry Biotechnology
Trailing-12-Month Revenue $18.5 million
Management CEO Stanley Erck (since 2011)
CFO Frederick Driscoll (since 2009)
Return on Equity (average, past 3 years) (58.6%)
Cash/Debt $20.7 million / $407.0 thousand
Competitors AstraZeneca

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 44% of the 81 All-Star members who have rated Novavax believe the stock will underperform the S&P 500 going forward.

Earlier this week, one of those Fools, biotech expert zzlangerhans, touched on Novavax's seemingly unsustainable price run:

Yet another on the long list of biopharmas enjoying an unjustified summer breakout. Trying to follow Novavax's vaccine pipeline gives me motion sickness. For five years I've tried to keep track of neverending phase I and I/II trials that seem to trail off into oblivion and then regenerate themselves months or years later. Nothing much is new of late except a [$12M] dilutive [equity financing] in May, but the stock is nevertheless up 50% from steady state since the beginning of June. Who gave the green light for all these stocks to go up without any rationale, and why wasn't I informed?

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

Read/Post Comments (2) | Recommend This Article (3)

Comments from our Foolish Readers

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  • Report this Comment On July 15, 2012, at 1:40 PM, KarlMotFool wrote:

    The "never-ending phase I and I/II trials " are for good reason. Examples are testing the trivalent seasonal vaccine, testing certain adjuvents and not using an adjuvent.

    I think they have also tested vaccines created from a 1,000 liter bio-reactor instead of the 100 liter. Novavax has evolved their process using the 1,000 liter bio-reactor. Novavax can now create vaccines in the far larger bio-reactor. That means Novavax can create vaccines more economically.

    The results of the RSV trial shows Novavax can modify a VLP vaccine to be far more effective. That is of major importance for dealing with RSV, which has NO current vaccine.

    There are a lot of good reasons for the recent buying.

  • Report this Comment On July 15, 2012, at 3:17 PM, paultaut wrote:

    The Panic buying is yet to come.

    Lately news has come to the forefront that the death total from the recent Pandemic was underReported to the tune of 15 times or 280,000 vs 15,000.

    Rumormill: That Universities looking for vacines against Fuure potential deadly strains have created them to do so. Security at one has been breached with working samples taken.

    As Flu season arrives around the globe, it won't take much to send these stocks parabolic.

    Buy on the rumor, Sell on the Fact.

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Novavax CAPS Rating: **