What happened?

Novavax (NASDAQ:NVAX) is already up by more than 1,800% year to date, but the company's stock still isn't done climbing. At least so says Mayank Mamtani, an analyst with B. Riley FBR, who reiterated a buy rating on Novavax today and gave the company a brand-new price target of $106, up from his previous target of $74.

This news may have been the catalyst for Novavax's shares jumping on Monday: The stock is up by 6.4% as of 3:22 p.m. EDT today.

So what

With several companies rushing to end the pandemic by developing an effective vaccine for COVID-19, Novavax has been one of the leaders in the race. Earlier this month, the company was awarded a grant of $60 million from the U.S. Department of Defense to advance the development of its investigational COVID-19 vaccine, NVX-CoV2373. But Mamtani believes that Novavax could receive even more funding from the government than it already has in its quest to develop a vaccine for the coronavirus. Even without additional outside funding, though, the analyst believes that Novavax has more than enough cash in the bank right now. 

Hand drawing upward pointing graph on a board.

Image source: Getty Images.

In particular, the company recently raised $200 million in gross proceeds when it sold convertible preferred stock to an investment fund affiliated with RA Capital Management in a private offering. The preferred stock is convertible into 4,388,852 shares of Novavax's common stock.

Beyond the company's current financial position, Mamtani holds that the addition of several high-profile executives makes Novavax an even more attractive play. Novavax recently appointed former AstraZeneca executive Filip Dubovsky to the position of chief medical officer, for instance. The combination of all these factors will continue to drive Novavax's stock higher, according to Mamtani.

Now what

There is no question that Novavax has had an incredible run year to date. And if the company makes more progress in its efforts to develop a vaccine for COVID-19, the sky is the limit.

But investors should remember that Novavax's shares will jump off a cliff if the company's potential COVID-19 encounters strong headwinds, such as negative results from clinical trials. For those looking to invest in this biotech stock, it is essential to take a prudent approach. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.