Novavax (NASDAQ:NVAX) released its second-quarter results on Aug. 5 and updated the market on its Covid-19 vaccine progress. Their Covid candidate has performed well in its Phase 3 trials and the company expects to apply for emergency use authorization (EUA) for distribution in the U.S. during Q4. As a result, it looks like NVAX stock is too cheap based on its forecasted earnings for next year.

NVAX stock has had a volatile year, although as of Sept. 9, it was up 134% year-to-date. Moreover, since its recent trough on May 13 when it was at $121, NVAX stock is up 113.9% to $258.77 as of yesterday. My view is that the stock could be worth up to 56% more at $403.75 per share.

Where Things Stand With Novavax

On Aug. 5, Novavax reported a net loss of $352 million, or $4.75 per share. That’s the bad news. But the good news is that the company is now producing revenue. It achieved $298 million in Q2 compared to $36 million in the same period last year.

In fact, so far this year, the company has produced $745.2 million in sales with a net loss of $575 million.

Moreover, analysts now expect to see $1.98 billion in sales this year and up to $5.49 billion in 2022, according to Seeking Alpha’s analyst survey. This obviously assumes that its Covid-19 vaccine gets approved in the U.S. and other countries.

The most important part of this survey is that these same five analysts now expect Novavax to make earnings per share of $32.3o next year. Again, this assumes that the company’s vaccines get full approval and get into production and distribution around the world.

The company says it is on track to produce 100 million doses of its Covid vaccine per month by the end of Q3 and 150 million doses by the end of Q4. It also signed an agreement to provide 1.1 billion doses to Gavi, the Vaccine Alliance. Novavax will produce 350 million of these vaccines itself.

Additionally, it will sell 100 million doses to the European Commission with an option to sell another 100 million.

Valuing NVAX Stock

Since NVAX presently has a $19.2 billion market capitalization, it is selling for just about 3.5 times the net sales forecast for next year. That seems to be way too cheap. Moderna (NASDAQ:MRNA) had a $184 billion market capitalization as of Sept. 9 with forecasts of $20.3 billion in sales for 2022. That puts it on a forward price-to-sales (P/S) multiple of 8.41 times.

Moreover, Moderna also traded for 14.69 times next year’s forecast for earnings per share (EPS) as of Sept. 9. By comparison, Novavax had a price-to-earnings (P/E) multiple of just 8.26 times with the forecast of $32.30 EPS on the same date.

So, let’s consider valuing NVAX stock at almost the same P/E multiple as MRNA stock. For example, let’s use 85% of the MRNA 14.69x multiple to value Novavax stock. That means we should multiply $32.30 EPS by 12.5 times, which results in a price of $403.75 per share. This presents an upside possibility of 56% over its Sept. 9 price of $258.77.

What to Do With NVAX Stock

Analysts remain very positive on NVAX stock. As Barron’s pointed out, Jefferies analyst Kelechi Chikere believes that “the rollout of NVAX’s vaccine appears on track to occur soon.” The analyst believes that this, along with other news, “could push shares higher over time.”

However, most analysts seem to think the stock is fully valued. The average price of three analysts who have written on the stock in the last three months, according to TipRanks, is $290.33. This is just 12.2% over its Sept. 9 price.

Moreover, Seeking Alpha indicates that the average of six Wall Street analysts is just $264.20, only slightly higher than yesterday’s price.

I highly suspect that these same analysts will revise their target prices higher. This could occur once Novavax produces its vaccines with EUAs and full authorizations.

Enterprising investors who are willing to take a chance might be open to buying a toehold stake. They may have to average in at lower prices, though, given how volatile NVAX stock has been. But by one measure, the stock appears undervalued and worth 56% more at $403.75 if its Covid-19 vaccine rolls out successfully.

On the date of publication, Mark R. Hake did not own any security, directly or indirectly, mentioned in the article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.