I usually shy away from making predictions. As a Danish proverb humorously states, "It's difficult to make predictions, especially about the future." But I'm going to make an exception.
My prediction is that Novavax (NVAX 0.87%) stock could soar 20% or more within the next 20 days. There are four key reasons why I think the vaccine stock could take off soon.
Image source: Getty Images.
1. Too much pessimism
The main reason why I think that Novavax is poised to pop is that there's simply too much pessimism about the stock right now. For example, as of Nov. 30, 2021, more than 10% of Novavax's outstanding shares were sold short.
Many investors who aren't shorting Novavax still remain overly negative about its prospects, in my view. The stock is still nearly 50% below its highs from earlier this year. The decline came primarily because Novavax missed its earlier timeline for filing for authorizations and approvals of its COVID-19 vaccine, NVX-CoV2373.
However, the company has since completed multiple regulatory submissions. It's even picked up Emergency Use Authorizations in Indonesia and the Philippines.
Granted, investors can be overly pessimistic about a stock for extended periods of time. But that usually is the case when there isn't good news on the way. In Novavax's case, though, I think there should be plenty of good news right around the corner.
2. European authorization could be imminent
One important positive development is likely imminent -- European authorization for NVX-CoV2373. Last week, European Medicines Agency (EMA) head Emma Cooke specifically said that Novavax's vaccine could be authorized in the European Union in the "near future."
I don't think Cooke would have made that statement at a meeting of EU health ministers if she didn't have a good reason to expect an authorization would soon be forthcoming. I'll admit that "near future" doesn't necessarily mean within the next 20 days. However, the EMA has fast-tracked its review process. The agency said on Nov. 17, 2021, that a decision could be made "within weeks."
Novavax stock jumped more than 20% on the news about Cooke's comments. Shares have since fallen around 7%, though. My view is that the vaccine stock will easily recapture all of those gains and tack on quite a bit more if European authorization is announced.
There's a lot of money for Novavax hinging on the European decision. The company has an agreement with the EU to supply up to 200 million doses of its vaccine once it secures authorization.
3. U.S. filing only days away
Novavax also has a supply agreement with the U.S. to provide 100 million doses of NVX-Cov2373 pending EUA. The company hasn't filed for U.S. authorization yet, but it should be only days away.
Over the past couple of months, Novavax has stated on several occasions that it plans to complete its U.S. EUA submission by the end of 2021. The company's latest confirmation of this schedule came on Monday.
I don't think that Novavax would express this confidence so close to year-end if it wasn't sure that it's going to be able to live up to its commitment. I also suspect that this U.S. filing could provide the psychological lift for investors that Novavax has been awaiting.
4. Other regulatory decisions pending
Potential European authorization and the U.S. EUA filing would be enough to boost Novavax's shares by at least 20%. However, there are other lesser regulatory decisions that are pending that could create a cascade of good news that drives the stock even higher.
Novavax currently awaits authorizations and approvals for its COVID-19 vaccine in seven countries. It also hopes to soon win Emergency Use Listing from the World Health Organization.
Will any of these decisions be made over the next 20 days? Perhaps not, but it's definitely possible.
Going out on a limb
Sure, I'm going out on a limb by predicting a specific percentage increase for Novavax within a short window of time. Such metaphorical limbs can -- and often do -- break.
There's no question that Novavax has multiple potential catalysts on the way in the near term, though. I could be dead wrong with my prediction. But I don't know of a stock that's more likely to jump 20% or more over the next 20 days than Novavax. We'll know by early January whether or not I'm right.
