From high-flyer to deep-diver. That's the story for Novavax (NVAX 8.40%) over the past two-and-a-half years.

In 2020, the stock skyrocketed 2,700% thanks to investors' excitement over the company's COVID-19 vaccine program. But most of that sizzling gain has now evaporated. Down a little over 80% from its high, is Novavax stock a smart buy now?

Behind the meltdown

It's important for investors considering Novavax to understand the factors behind the stock's meltdown. I think those factors primarily fall into two categories.

The first category is Novavax's delays both in filing for and obtaining regulatory approvals and authorizations of its COVID-19 vaccine. The company overpromised and underdelivered multiple times on this front.

However, these delays are largely in Novavax's past now. Its COVID-19 vaccine, NVX-CoV2373, has picked up authorizations from more than a dozen regulatory agencies, with the most recent coming last week with approval in Japan.

Most of the other factors causing Novavax's share price to plunge can be lumped into the category of overall uncertainty about the future demand for COVID-19 vaccines. Even when the U.S. experienced a surge in COVID-19 cases due to the coronavirus omicron variant, many believed they saw a light at the end of the tunnel for the pandemic. Vaccine stocks, including Novavax, fell on concerns that demand for the vaccines would soon decline.

And now there's more supply of COVID-19 vaccines globally than there is demand. The Serum Institute of India (a partner to Novavax) even stopped making COVID-19 vaccine doses in December because of a supply glut.

A healthcare professional giving a shot to a person.

Image source: Getty Images.

Potential catalysts ahead

But Novavax could have key catalysts on the way. The company hopes to soon receive U.S. Emergency Use Authorization (EUA) for NVX-Cov2373. It's working with the U.S. Food and Drug Administration (FDA) to answer questions about clinical and manufacturing data in the regulatory submission. 

The FDA plans to convene a meeting of the Vaccines and Related Biological Products Advisory Committee (VRBPAC) to review Novavax's data. Novavax said in a statement to CNBC's Meg Tirrell that it "look[s] forward to scheduling our VRBPAC meeting in the near future as indicated by the FDA."

Investors could also be excited when Novavax reports its financial results in upcoming quarters. The company will at long last be able to record actual product sales with its COVID-19 vaccine on the market in several countries. 

Don't discount the possibility that changing COVID-19 dynamics could work to Novavax's advantage as well. China is experiencing its worst outbreak since early 2020. Vaccine hesitancy in some countries could lead to increased promotion of Novavax's protein sub-unit vaccine as an alternative to messenger RNA vaccines.

A beaten-down buy?

With all of that in mind, let's return to the original question: Is Novavax stock a smart buy with the stock beaten down so much? My view is that it is -- for two key reasons.

First, Novavax's plunge has made the stock really cheap. Shares currently trade at a forward earnings multiple of 1.34. Sure, there are a lot of questions about the future demand for COVID-19 vaccines beyond 2022 and 2023. But the stock's valuation has gotten too low to ignore, in my view.

Second, Novavax remains the leader in the race to develop a combination COVID-19/flu vaccine. I suspect that combo vaccines will be the winners over the next few years. Novavax expects to advance its COVID-19/flu combo vaccine into phase 2 testing by the end of 2022. 

Novavax still faces risks. Most importantly, it's possible that the demand for COVID-19 vaccines really could plummet. However, buying the stock at its current beaten-down valuation could be a winning strategy for aggressive investors.