Novavax (NVAX 0.93%) has been a volatile stock over the past few years. From optimism around its COVID-19 vaccine to concerns about delays, it has sent its investors on a roller-coaster ride. Early investors are sitting on some incredible returns right now, but those who bought early on this year when the stock was trading at more than $300 have incurred steep losses.
I'll look back at how you would have done in 2020 if you had bought at different months, and how early you would have needed to get in on the stock to earn a great return. And, most importantly, I'll assess whether the stock worth buying today.
Image source: Getty Images
How early would have been early enough in 2020?
Here's a look at Novavax's share price at the start of each month of 2020, how many shares you could have bought with a $10,000 investment, and what the value of it would be today.
| Month | Closing Price | Shares Bought | Approximate Value Today | Return |
|---|---|---|---|---|
| January | $4.49 | 2,227.2 | $351,448 | 3,414% |
| February | $6.81 | 1,468.4 | $231,718 | 2,217% |
| March | $12.02 | 831.9 | $131,281 | 1,213% |
| April | $14.03 | 712.8 | $112,473 | 1,025% |
| May | $17.33 | 577.0 | $91,056 | 811% |
| June | $52.82 | 189.3 | $29,875 | 199% |
| July | $79.70 | 125.5 | $19,799 | 98% |
| August | $155.87 | 64.2 | $10,124 | 1% |
| September | $105.08 | 95.2 | $15,017 | 50% |
| October | $104.90 | 95.3 | $15,043 | 50% |
| November | $82.40 | 121.4 | $19,150 | 92% |
| December | $123.47 | 81.0 | $12,780 | 28% |
Data source: Yahoo! Finance.
Investing at the start of January would have netted the best return, at a whopping 3,414%. It was late February that the healthcare company announced it was advancing development of its COVID-19 vaccine and that phase 1 trials would commence in the coming months. If you had the foresight to bet on the company at that point, it would have been a tremendous gamble; it wasn't until March that the World Health Organization (WHO) even declared the coronavirus a pandemic. The company was also coming off a year in which it generated just $19 million in revenue (mainly through grants and government contracts) and incurred a loss of $133 million.
April presented a more realistic time when the risk-reward ratio became more tenable. At that point, the pandemic was here and Novavax had announced the previous month that it would be receiving $4 million in funding from the Coalition for Epidemic Preparedness Innovations (CEPI) to help with the development of the vaccine. In May, CEPI would add another $384 million to that funding. Before the end of the month, the company enrolled its first participants in its phase 1/2 trial. By the start of June, shares were already up over $50. If you waited until then, your investment would have tripled in value.
And if you waited until December, the stock would be up to $123. Later in the month, the U.S. Food and Drug Administration would issue Emergency Use Authorizations (EUAs) for vaccines from Pfizer and Moderna. The authorization for Johnson & Johnson's vaccine would come in February 2021.
Is Novavax a good buy today?
It has been more than a year since the EUAs came in for Moderna and Pfizer's vaccines. More than 60% of the U.S. population is fully vaccinated and many people are on their way to receiving their booster shots. Novavax could apply for an EUA any day now, and investors may be getting unnerved by the lack of progress and constant delays.
But even if it doesn't obtain an EUA in the U.S., there's arguably much more of a need to fill in other parts of the world, especially in countries where vaccination rates are significantly lower. The downside is that Novavax might not fetch as high a price for its vaccine, but it would still generate revenue nonetheless. In November, Novavax received EUAs from the Philippines and Indonesia for its vaccine, and it has applied for approvals in other countries as well. On Dec. 17, the World Health Organization added the vaccine to its Emergency Use Listing, potentially paving the way for Novavax's vaccine to get exported to even more countries.
It's safe to say that Novavax will generate COVID-19-related revenue, but whether it will be enough to support its current valuation is the bigger question at this point. At a forward price-to-sales (P/S) multiple of more than eight, it's priced higher than the other vaccine makers mentioned earlier:
NVAX PS Ratio (Forward) data by YCharts
Novavax has taken a long time to get to where it is today, which is well behind the leaders in the COVID-19 vaccine market at this point. And based on that track record, I wouldn't take a chance on a stock that has created a bit of reputation for delays and disappointing investors. At this stage, there may be more risk than there is reward, and that's why I'd avoid Novavax stock for now.
