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What in the World Is Going on With Novavax Stock?

By Alex Carchidi – Dec 10, 2021 at 6:18AM

Key Points

  • Novavax hasn't been a stable stock over the last year.
  • Fears about the omicron variant spell uncertainty for the company's vaccine's role.
  • Manufacturing issues continue to be a painful stumbling block.

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It's being simultaneously battered by setbacks and buoyed by optimism.

It's a cliche to say that certain stocks are like roller coaster rides, but the coronavirus vaccine developer Novavax (NVAX -2.90%) has given a completely new meaning to the term over the last 12 months. While it's up more than 64% this year, in the last three months shareholders have taken losses of about 27%, which means that many of the people who bought shares at the peak early this year are likely to be displeased. 

Still, in the last month alone, Novavax's stock has climbed sharply as the company scored crucial approvals for its vaccine and started commercialization of its vaccine in international markets like the Philippines and Indonesia. And the omicron variant appears to have juiced it even further.

But as a result of even more delays with its manufacturing and the filing of a class action lawsuit by shareholders, things are far from settled. Especially for investors who are wondering whether to keep holding Novavax, it's worth investigating what's going on in more detail.

A doctor loads a syringe while a patient waits with her sleeve pulled up.

Image source: Getty Images.

Delays keep piling up

It's obvious that investors are eager for Novavax's vaccine to get the global rollout that the company has been working for since the start of the pandemic, but bumps in the road are slowing things up.

Manufacturing has been a problem since late last year, when the company announced that its all-important phase 3 clinical trials would need to be pushed back to wait for more doses to be made. A full year later, the new problem with its manufacturing appears to be the presence of impurities in its vaccine. It'll need to solve these production issues if it wants to keep scaling up to serve unmet global demand for doses. 

As with other vaccine stocks, the market hasn't been totally kind to Novavax after these delays.

NVAX Chart

NVAX data by YCharts

And the manufacturing hiccups aren't the only ones. While the company has filed for approval with the World Health Organization, it hasn't yet done so with the Food and Drug Administration (FDA) in the U.S. Originally, that was supposed to happen in mid-2021, but now it might take until mid-2022.

Though international markets are more likely to be a promising center for growth in comparison to the highly saturated vaccine markets in the U.S., investors can probably expect the stock to get a boost whenever it does end up requesting approval by regulators. 

The omicron factor

As troublesome as getting Novavax's vaccine out the door has been, long-term shareholders have experienced plenty of upside as the pandemic has worn on. In particular, the need for booster shots led the company to start investigating its candidate for suitability as an additional dose. If it is effective as a booster, it'll be yet another opportunity to make more revenue from global sales. 

That'll be especially good for shareholders if the vaccine is found to be effective against the omicron variant, which has so far been a wild card.

Despite the company's announcement on Dec. 2 that it was pursuing a vaccine specific to the omicron variant, its stock cratered through Dec. 6 due to general panic in the market about the efficacy of the existing vaccines and soon-to-be-released candidates. Then, as the panic eased, Novavax shares surged by more than 28.8% on Dec. 7 after European regulators said that the company's vaccine could be on the brink of approval.

Good news about its steps toward commercialization will send the stock higher, but new findings about omicron could very easily reverse the situation once again. 

A high risk moment

So for the moment, Novavax is a risky stock for new investors. For those who bought it at one of the many low points of 2021, it's probably worth holding at least a bit longer. There's no telling when the stock will recapture its early-year highs, especially considering the difficulty with manufacturing enough doses to honor its commitments to paying customers.

Alex Carchidi 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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