Novavax Is Not a Sure Thing, But It’s Getting Closer

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It’s OK to like NVAX stock, but still demonstrate patience

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Novavax (NASDAQ:NVAX) stock is on a bullish run after the company’s most recent earnings report.

After gapping down 19% after issuing its second-quarter report, NVAX stock has been on a tear; climbing 35%. The catalyst is the Delta variant of the novel coronavirus that is bringing the issue of global vaccine access to the forefront.

The bullish case for Novavax illustrates the idea that it will take a village to get as many humans vaccinated throughout the world. At the beginning of the year, the race for a Covid-19 vaccine looked to be all but over. As with many things regarding the pandemic, that turned out to be wishful thinking.  

While the percentage of vaccinated Americans is only peripherally about access to the vaccine, that’s not the case in other countries. As the rapid spread of the virus in India proved, many countries lack access to a vaccine.  

And with a vaccine candidate that looks like ready to go, Novavax is looking like it may be a player in the Covid-19 vaccine race after all.  

Playing the Waiting Game

It’s not that Novavax isn’t trying to get FDA approval in the United States. However, the company just moved the timeline for applying for a second time. It appears the issue is one of having a clinical trial size in the United States that the FDA will accept. The company has significant data from trials conducted outside of the U.S., but the FDA is not budging. 

On the one hand, this wouldn’t appear to be significant. The United States has three vaccines with an emergency use authorization. It’s unlikely that a fourth or fifth vaccine will reduce vaccine hesitancy. 

But in another way, this is a big deal because it may erode confidence in the vaccine before it’s even released. In this sense, I agree with Keith Speights of The Motley Fool who remarks that the company’s moving the timeline on applying for FDA approval of its Covid-19 candidate is reason for concern.

But I also acknowledge that InvestorPlace’s Alex Sirois may be on to something when he suggests that in a weird way, Americans may be more accepting of the vaccine if they know it’s been through its paces.  

Thinking Global

Novavax bulls will point out that the company is looking to distribute is Covid-19 vaccine internationally, and it has contracts lined up with at least 10 other countries. This makes sense. Both the Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) vaccines have storage temperature restrictions that are making international distribution a logistical challenge. The Novavax vaccine has no such concerns which has investors excited.  

However, that doesn’t mean Novavax will be able to proceed without FDA approval. One of the company’s partners, the Serum Institute of India (SII) has announced it will not be able to launch the Novavax vaccine in India without a license. And SII won’t be able to get that license until Novavax is able to resolve the issues it is having with the FDA.  

SII is optimistic that Novavax can resolve those issues by October. That would fit the timeline that Novavax has given for submitting its vaccine for FDA approval in the fourth quarter. However, it’s unclear if that guidance is coming from Novavax or from the FDA. 

NVAX Stock Is Near Its Price Target 

NVAX stock is trading slightly above the consensus price target of analysts. I was immediately curious to see if sentiment had changed since the company issued its earnings report. So far, only Zack’s Research has upgraded the stock to a hold.  

But the good news is the price target has been steadily moving higher. In the last month, investors have been buying both the rumor and the news coming from Novavax. That may be a sound strategy if the company hits its milestones.  

But if there’s one thing we’ve learned about the Covid-19 vaccine race it’s that we can’t rely on “if’s and but’s.” My advice for NVAX stock remains to hold until the company gets more clarity from the FDA.  

On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.  

Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019. 

Article By Chris Markoch, InvestorPlace