Once upon a time, Novavax (NVAX 8.40%) ranked as the hottest COVID-19 vaccine stock around. These days, Novavax is anything but hot. Its shares are down more than 40% so far this year and more than 70% below their 52-week high. 

Some might have written Novavax off as a lost cause. But can this beaten-down stock double in 2022? 

A healthcare professional giving a shot to a person.

Image source: Getty Images.

What it would take

It might not be as difficult for Novavax to double as you think. Actually, all the stock would need to do is climb back to where it traded in December 2021. And in several ways, the outlook for Novavax was more questionable then than it is now.

Importantly, Novavax has scored several key regulatory wins even as its share price sank. The company picked up Emergency Use Authorization (EUA) for its COVID-19 vaccine NVX-CoV2373 in India. South Korea granted approval to the vaccine. Great Britain gave its conditional marketing authorization, New Zealand granted provisional approval, and Singapore announced interim approval for NVX-CoV2373 as well.

There's still one big prize dangling before Novavax, though. The company awaits an EUA decision by the U.S. Food and Drug Administration (FDA). A positive nod from the FDA would likely provide a major boost to Novavax stock. A subsequent expansion of EUA for NVX-CoV2373 as a booster to other COVID-19 vaccines would also almost certainly light a fire beneath the stock.

Probably the biggest catalyst for Novavax, however, could come as it shows investors the money with sales from NVX-CoV2373. The company's shares trade at a forward price-to-earnings ratio of 1.8. That dirt-cheap valuation indicates to me that many investors still don't believe that Novavax's vaccine will achieve commercial success. If Novavax proves them wrong, its stock should soar.

What could get in the way

But the obstacles for Novavax are easy to identify. For one thing, U.S. EUA for NVX-CoV2373 isn't a slam dunk. It's possible that the FDA could identify issues with Novavax's regulatory filing. The most likely culprit would be manufacturing concerns -- the key reason behind the company's delays in submitting for EUA last year.

Also, don't assume that regulatory authorizations and approvals automatically lead to commercial success. The European Union, for example, has a deal with Novavax that allows member EU countries to buy up to 100 million doses of NVX-CoV2373 with an option for another 100 million doses. However, EU members aren't required to purchase the vaccine.

Novavax had good news in January with France, which is part of the EU, approving NVX-CoV2373. But there was an important caveat with this approval: The French national healthcare agency is still prioritizing the administration of rival messenger RNA (mRNA) vaccines. This underscores the challenge that Novavax faces in converting regulatory wins into actual revenue.

Remember too that investors are always looking to the future. One of the key reasons behind the steep declines for vaccine stocks in recent weeks has been the expectation that COVID-19 cases could soon fall significantly once the coronavirus omicron variant runs its course. If the outlook for COVID-19 vaccine demand beyond 2022 appears to be weak, Novavax's share price might not rebound much.

2x in 2022?

I look for Novavax to win U.S. EUA for NVX-CoV2373. I also expect that the company will generate at least $4 billion in revenue this year and probably close to $5 billion. These factors could be enough to drive Novavax's share price 100% higher this year by themselves.

However, there are also a couple of wild cards to keep in mind. First, the emergence of a new coronavirus variant could cause investors to once again flock to vaccine stocks. Second, Novavax should report data from a phase 1/2 study evaluating a combination of NVX-CoV2373 with experimental flu vaccine NanoFlu in the first half of 2022. Positive results would make the company the clear leader in the race to develop a COVID-flu combo vaccine.

Sure, Novavax remains risky. There's no guarantee that its stock will deliver a 2x return this year or even generate positive gains. Despite the uncertainties, though, my view is that Novavax stock has a good shot at doubling in 2022.