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Why Novavax Is Blasting Higher Today

By George Budwell – May 18, 2020 at 12:17PM

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The clinical biotech is benefiting from an analyst upgrade and optimism about its pipeline.

What happened

Shares of clinical-stage vaccine company Novavax (NVAX -3.32%) are popping yet again Monday. The biotech stock was up by 33.2% on extremely heavy volume as of 12:07 p.m.

Novavax's latest move higher was sparked by a notable upgrade from investment bank B. Riley FBR. The firm reportedly raised its 12-month price target on the stock from $43 to $53 a share due, in part, to the recent $388 million in funding it received from the Coalition for Epidemic Preparedness Innovations. The company will use that influx of cash to advance the clinical development of its SARS-CoV-2 vaccine candidate, NVX-CoV2373.

A kid wearing paper wings measuring herself against a ruler drawn on a wall.

Image Source: Getty Images.

So what

Novavax's shares are now up by a staggering 1,360% year to date. Investors have piled into the developmental biotech stock for two reasons. First, its coronavirus vaccine candidate could become a healthy revenue generator for the company. Secondly, it's barreling toward its first regulatory filing with an experimental flu vaccine called NanoFlu. If approved, it has blockbuster sales potential. 

Now what

It might be time to take some profits off the table with this high-flying biotech stock. Novavax's shares were arguably a screaming buy when it was priced in the mid-teens back in March and April, thanks to the commercial potential of NanoFlu. But the biotech's shares no longer sport a particularly compelling risk-to-reward ratio, given how much clinical and regulatory uncertainty remains around its future.

George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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