Despite seeing losses of more than 50% this year and severely underperforming the market, Novavax (NVAX -0.95%) stock might not be finished falling. In late December 2021, the World Health Organization granted another emergency use listing for its coronavirus vaccine, but, much to the chagrin of shareholders, it failed to stop the stock's tumble.
That doesn't mean Novavax will be underperforming the market forever, though. If anything, its ensuing vaccine revenue and its ongoing pipeline development should (eventually) show the market that the company is worthwhile. Here's why.
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Sales and earnings are likely to be strong
While it might not be enough to stem the stock's losses immediately, Novavax will report its fourth-quarter earnings either at the end of February or at the start of March. And there's every reason to believe that it'll be reporting that it's raking in money at an industrial scale.
In 2021, Novavax signed advance purchase agreements to deliver more than 400 million doses of its vaccine, Nuvaxovid. Across five analysts, the average revenue predicted from Nuvaxovid for this year is $4.62 billion, a massive increase over the $1.38 billion estimated for 2021. A faster-than-expected vaccine rollout could easily lead the business's actual sales to outperform these figures, which could in turn cause the stock to move higher. Plus, given that the pandemic (lamentably) isn't over, it's highly probable that customers will come back for more doses once they use the ones they purchased last year.
Right now, its manufacturing operations should be capable of minting around 150 million doses per month. And that level of output is likely increasing over time, with the company expanding its manufacturing agreement with the South Korea-based SK Bioscience in late December. As long as there's more demand for doses than there is supply on the global market, Novavax is likely to keep scaling up while collecting fresh orders, and that's a very positive sign for the stock.
Will progress in the pipeline restore the market's confidence?
Aside from its upcoming earnings report, ongoing work in Novavax's pipeline is likely to impact the price of its shares in the near future.
Specifically, it's going to be working on studies examining how its shot performs when used as a booster. It might also initiate a new variant-specific jab program against the omicron variant, though that may not be necessary depending on how the pandemic proceeds. Both of these programs have significant revenue-making potential if completed, to say the least.
Likewise, the company will be submitting regulatory filings to get its jab approved for use in people between the ages of 12 and 17. On top of that, fresh clinical trials testing the vaccine in even younger patients are forthcoming in the first half of 2022. Conducting this work is essential if Novavax wants to compete with Pfizer and Moderna over global market share.
Then there's its ongoing effort to make a vaccine that protects against both the coronavirus and influenza. Data from the combination jab's phase 1/2 clinical trials is expected in the first half of this year. Still, the data update will need to be quite positive if it's going to help shareholders recoup some of their losses over the short term.
Don't catch a falling knife
As probable as it is that Novavax is going to start reporting impressive earnings and favorable pipeline progress in 2022, I urge investors not to jump and buy the stock before those reports are in hand. Its market cap is currently around $5.3 billion, which is far from its peak near $15.7 billion in late June 2021, and there could be more losses to come.
For whatever reason, the market doesn't feel good about this stock right now -- nor does it feel positively about competitors like Moderna, which has fallen by more than 59% so far this year. If this starts to turn around with the publication of earnings or clinical trial data, that'll be the sign to move.
But it's important to remember that Novavax is still a speculative stock. If the thought of a risky purchase losing money makes you lose sleep at night, it's probably for the best to find something else for your portfolio.
