What happened

Shares of Vaxart (NASDAQ:VXRT) were skyrocketing 26.4% higher as of 11:22 a.m. EDT on Monday. The huge jump came after investment bank B. Riley FBR initiated coverage on the stock with a buy rating and a price target of $22. This price target represented a 176% premium over Vaxart's closing price on Friday.

So what

It's usually best to take analysts' price targets with a grain of salt. On the other hand, investors can benefit from trying to understand why analysts like or don't like a given stock. 

Rocket flying over a red line with an arrow

Image source: Getty Images.

In this case, B. Riley FBR appears to be very optimistic about the prospects for Vaxart's oral COVID-19 vaccine candidate. This experimental vaccine was recently selected by the U.S. government's Operation Warp Speed for funding and inclusion in a preclinical study. 

Keep in mind, though, that it's way too soon to know if Vaxart will be successful. In April, the company reported encouraging results for its oral COVID-19 vaccine candidate in preclinical testing. However, the vaccine candidate hasn't advanced to clinical testing yet.

Now what

Vaxart hopes to advance its oral COVID-19 vaccine candidate to a phase 1 study in the second half of 2020, potentially as early as this summer. Until that trial begins, probably the main catalyst for the biotech stock will be the results for preclinical testing of its universal oral flu vaccine candidate. This preclinical testing is being conducted in collaboration with Johnson & Johnson.

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.