Novavax (NVAX) and Teladoc Health (TDOC 0.30%) both were stock market superstars in 2020. As the pandemic deepened, investors bet on Novavax's coronavirus-vaccine program and Teladoc's ability to bring medical visits right into people's homes. As a result, Novavax shares surged 2,700% and Teladoc stock climbed 138%.
Last year, however, the picture dimmed for both players. Novavax fell behind in its regulatory-submission schedule, and investors worried a post-pandemic world would equal declining business for Teladoc. But these two players are showing the market they have what it takes to grow now -- and beyond the pandemic.
Which one makes the best growth pick? Let's take a closer look at each.
Image source: Getty Images.
The case for Novavax
Investors expected Novavax to apply for Emergency Use Authorization (EUA) in the first half of last year, but the biotech struggled to ramp-up production -- and this delayed regulatory submissions. Since then, Novavax has resolved manufacturing issues and even won authorization in more than 30 countries. Novavax has submitted all data to the U.S. Food and Drug Administration and expects to officially apply for an EUA any time now.
Last year, Novavax predicted billions of dollars in revenue in the four to six quarters following authorization. The company already has contracts with various countries. For example, it signed a deal with the European Union to provide as many as 200 million vaccine doses.
Of course, the delay in reaching the market may put a dent in original revenue predictions. Earlier-to-market rivals have taken leadership when it comes to the primary vaccination series, but Novavax could win big on booster shots. Regulators have authorized mixing and matching of brands.
Today, Novavax trades at about $130 under Wall Street's very lowest 12-month price forecast. At this level, the shares are trading at only 2.9 times forward earnings estimates.
The case for Teladoc
Teladoc's revenue soared during the first year of the pandemic. But here's one of the reasons I'm optimistic about the company's future: Its online medical visits and revenue continue to grow -- even after business at doctors' offices returned to normal.
In the third quarter of last year, for example, Teladoc medical visits climbed 37%, and revenue jumped 81% to $522 million. This is a clear sign that patients like the telemedicine experience and are continuing to use it beyond lockdowns or times when some medical offices might be closed.
The company also is starting to benefit from its acquisition of Livongo back in 2020. Livongo brought strengths in the virtual management of chronic conditions.
In the most recent quarter, Teladoc said 24% of its chronic-care members are enrolled in multiple programs, and only 8% were enrolled in more than one during the year-earlier period. This is all part of Teladoc's goal to deliver "whole person" care. The company offers access to experts in more than 450 specialties, and members can see a medical professional around the clock seven days a week.
Like Novavax, Teladoc is trading for less than Wall Street's lowest 12-month share-price estimate and at about five times sales, compared to about 24 a year ago.
Will it be Novavax or Teladoc?
Both of these companies offer significant growth prospects and are bargains right now. I'm optimistic about the outlook for both Novavax and Teladoc. But if I had to choose the best growth stock today, I would opt for Novavax. The company is on its way to reporting product revenue for the first time -- and according to forecasts, even a profit. This could be a clear share-price catalyst.
It's important to remember that even post-pandemic, the coronavirus isn't disappearing. People still will need vaccines or boosters. Novavax also is working on a combination flu/coronavirus vaccine candidate, and its flu-vaccine candidate met all primary endpoints in a pivotal clinical trial. The next step is regulatory approval. So there are a few catalysts ahead for this beaten-down stock.
Of course, that doesn't mean declines are over. Novavax remains very sensitive to coronavirus news and recent turmoil in the market. But over the long term, the company has the elements necessary to grow revenue -- and that may translate into share-price gains, too.
