Shares of Novavax (NVAX -0.18%) were plunging 26.3% this week as of the market close on Thursday, according to data provided by S&P Global Market Intelligence. Two factors contributed to the dismal performance.
First, the overall stock market tumbled as investors fretted over the Federal Reserve's latest interest rate hike. This move weighed on most stocks. Novavax wasn't an exception.
Second, JPMorgan Chase analyst Eric Joseph downgraded the vaccine stock from neutral to overweight (meaning: likely to do better in the future). Joseph also slashed his 12-month price target on Novavax from $132 to $27.
Analysts don't always make the right calls with their ratings. However, there are legitimate reasons to be concerned about Novavax's near-term prospects. In particular, COVID-19 vaccinations have essentially flatlined in the U.S. The number of COVID-19 cases has declined. It's likely that the demand for Novavax's Nuvaxovid vaccine will be low.
Perhaps the situation for Nuvaxovid will improve somewhat in Europe. The European Commission recently expanded the conditional market authorization for the vaccine to be used as a booster. However, Novavax still awaits U.S. authorization for the use of Nuvaxovid as a booster.
Novavax hopes to file for authorization of its booster targeting the coronavirus omicron variant in the fourth quarter of this year. If there's another surge in COVID-19 cases this winter, it's possible that Novavax could win additional supply deals.
Over the longer term, the market could shift to combination vaccines that provide protection against both COVID-19 and flu viruses. Novavax could be a leader in the combo market. The company expects to advance its COVID-flu combo vaccine candidate into late-stage testing in 2023.