Demand for Covid-19 vaccines is still strong in developing countries, but Novavax (NASDAQ:NVAX) is one of the most interesting beneficiaries. The company’s vaccine was recently approved by several countries. Plus, one of the company’s biggest problems has been mitigated. Overall, the outlook for NVAX stock definitely looks to be improving.
Still, NVAX shares are not necessarily suitable for conservative or long-term investors. This is because the title remains risky in a more general sense. In addition, its outlook beyond the short and medium term is still very uncertain.
Here’s what you need to know about NVAX stocks going forward.
NVAX action: the prognosis has rebounded
As for Novavax and other vaccine manufacturers operating in developed countries, I am sure their outlook is mixed. In the United States, for example, hospitalizations linked to Covid-19 have eased. Even across Europe – although cases are reaching record levels – hospitalizations are relatively low.
It is not known how long the pandemic will last in developed countries at all levels. For example, infectious disease specialist David Boulware recently discussed new, apparently very effective treatments for the novel coronavirus. According to The Washington post, Boulware said the following: “I am an optimist. In six months, I think things will be fine. Equally uncertain for developed countries is the extent to which children will receive vaccines as well as the number of adults who will follow the booster shots.
However, the story is very different for a lot of development countries. Many adults in these areas still want a vaccine but haven’t had a chance to get one yet. On this front, Novavax has received some very good news.
Specifically, in mid-November, the Philippines issued an Emergency Use Authorization (EUA) for the company’s Covid-19 vaccine, following in Indonesia’s footsteps. In early November, Indonesia was the first country to grant the drug an EUA. These two countries are important; the Philippines has over 110 million citizens and Indonesia’s population exceeds 275 million.
On top of that, Serum Institute of India (SII) CEO Adar Poonawalla recently said the jab is expected to be approved by Indian regulators soon. The Serum Institute of India has partnered with Novavax to make a version of the vaccine called Covovax.
SII also appears to have mitigated another big issue for Novavax and NVAX stocks. For much of 2021, there had been concerns about whether the company could manufacture sufficient quantities of its vaccine. However, SII – which is said to have manufactured 24o million doses of AstraZeneca (NASDAQ:AZN) vaccine every month – make the doses to be delivered to Indonesia. Presumably, it will also manufacture doses of Novavax for other countries.
High risks involved
That said, even with the help of SII and other partners, managing vaccine manufacturing will be a monumental task for Novavax. After all, the company only had around 500 employees in June.
Additionally, given that the company’s shot has yet to be used outside of testing, there’s always a chance it may not perform as well as expected. It might also have more side effects than expected.
Finally, as I indicated earlier, Boulware believes that new therapies will allow the world to do “big” when it comes to fighting the pandemic six months from now. In addition, driven by the increase in cases and other vaccines, herd immunity could develop in many areas in the coming months. Such a situation, in turn, could cause NVAX shares to fall.
The result on NVAX shares
In the short to medium term, as approvals for the Novavax shot pour in, the stock of NVAX is expected to continue to climb. But there is still a risk that the pandemic will subside further in the medium term. This could cause the stock to drop instead.
Still, I personally bought a small amount of NVAX shares as a short to medium term investment. In my opinion, other risk tolerant investors may want to do the same.
For the long term, however, the risk behind these actions will only increase. Over time, collective immunity becomes more and more likely. In addition, more effective therapies will be approved and widely used.
At the date of publication, Larry Ramer held a long position in NVAX. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.
Larry Ramer has researched and written articles on US equities for 13 years. He was employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing articles for InvestorPlace in 2015. Some of his highly successful contrarian picks include GE, Solar Stocks, and Snap. You can reach him on StockTwits at @larryramer.