Is it going to be “too little, too late” for Novavax (NASDAQ:NVAX)? It’s starting to look that way. Sure, this company’s large backlog of overseas orders may make up for the dim prospects of its Covid-19 vaccine in the U.S. market. Yet, with manufacturing delays and other hiccups, even this bright spot for NVAX stock has its share of uncertainty.
In short, it’s no surprise that investor confidence has continued to erode here. NVAX stock had already experienced a major slide between February and late April, when it fell from $331.68 to around $250. But, with concerns still mounting, the stock has been taken another notch lower in the past few weeks. Since Apr. 28, it has fallen around 40%, from a close of $244.27 to around $146 per share.
Plus, with nearly all of its value predicated on its Covid-19 catalyst paying off, NVAX shares could see yet another fall if there’s further disappointment. Weighing the odds of a rebound against the likelihood of another big tumble — one to $100 and below — the risk-return profile doesn’t appear to be in your favor here.
NVAX Stock: Can an Overseas Backlog Save the Day?
We’ve seen many factors put downward pressure on NVAX stock in the past few months. However, it’s not as if the company has only had bad news. That’s why the stock, while down big from its 52-week highs, is still up over 217% in the past year.
Of course, it may have long-shot odds (at best) of finding success with its vaccine in the U.S. market. And that’s not just because candidates from Johnson & Johnson (NYSE:JNJ), Moderna (NASDAQ:MRNA) and Pfizer (NYSE:PFE) beat it to full rollout. As InvestorPlace contributor Nicolas Chahine wrote on May 17, the company has also continued delaying its vaccine Emergency Use Authorization (EUA) application to the U.S. Food and Drug Administration (FDA).
That said, stateside sales may not be necessary to save NVAX stock. Why? Currently, the company has high levels of orders in other markets. According to Statista, countries across the globe have ordered around 1.4 billion doses of the company’s vaccine. A bulk of these orders come from Gavi, a public-private partnership that distributes vaccines to the developing world. Other major orders include Indonesia, Canada and the United Kingdom. The company also has a deal in the works to supply the European Union (EU) with doses.
Still at Risk of Cratering Back to Double-Digit Prices
Orders from markets outside of the U.S. may be promising. However, securing these orders is only the first step. The second step is delivering on these orders. And so far, the company has struggled to stay on schedule. That’s been seen in the continued revisions to its rollout timeline.
Right now, Novavax projects being able to produce 100 million vaccines per month by next quarter and 150 million vaccines per month by the last quarter of 2021. That said, some analysts like J.P. Morgan’s Eric Joseph are skeptical about it meeting this goal. Joseph sees further delays ahead, as challenge to produce at scale continue.
Downgrading NVAX stock to “neutral,” Joseph also lowered his price target from $285 to just $161 per share. Yes, that’s a little above the current price. Unfortunately, though, the price levels we’re seeing now may only be the start. If the prospects for this company’s vaccine rollout worsen, watch out.
The strong order numbers here are likely what’s kept this stock from giving up even more of its pandemic-related gains. However, if it becomes clear that Novavax will fail to meet production and delivery goals, it may be the last straw. Additional disappointment could send NVAX stock back below $100.
NVAX Stock: Rebound Potential Fails to Outweigh the Risk
Sure, it’s not as if Novavax has little to fall back on if its vaccine winds up a bust. Other candidates in its pipeline include the NanoFlu vaccine as well as the Matrix-M adjuvant. But these candidates are not what’s helping NVAX hold up its current $10.9 billion market capitalization. That valuation is still almost entirely built upon its Covid-19 vaccine.
If this company can manage to live up to its current delivery timeline, we may see a rebound. However, given its underwhelming track record over the past few months, there’s little reason to trust that its fortunes will turn around. For me, that makes NVAX stock a name to pass on at today’s prices.
On the date of publication, Thomas Niel 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 InvestorPlace.com Publishing Guidelines.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.