- Novavax (NVAX) stock traders might be tempted to buy the dip after a stock market crash.
- Still, the disappointing financial performance and negative pressure on share prices makes it difficult to recommend an investment now.
- Investors should remain cautious until there is a shift in sentiment with Novavax.
Novavax (NASDAQ:NVAX) develops and markets new products to prevent a wide range of infectious diseases. For many investors, Novavax is best known for developing the Covid-19 vaccine NVX-CoV2373, also sometimes known as Nuvaxovid. Even though NVAX stock may seem like a high-potential Covid-19 vaccine stock, it’s time for investors to be cautious and not aggressive.
As you probably know, Novavax wasn’t the first to market in the United States with a Covid-19 vaccine — not even close. Still, there have been times when investors have sent Novavax stock price to new highs.
Those good times seem to be in the rearview mirror now, though. The thrill is gone for NVAX stock traders, and the stock’s performance in 2022 so far has been less than stellar.
Admittedly, part of the traditional “buy low, sell high” strategy is to buy stocks during peaks of pessimism. Nevertheless, after learning the essential facts about Novavax – and the bearish opinion of a prominent analyst as well – you might be persuaded to steer clear.
What’s going on with NVAX shares?
Just in the past 12 months, NVAX stock has reached $277.80. It has been closer to the $50 area lately, so there is no doubt that the sellers are in control.
Before you start dreaming of a return to the $200, you should at least consider what you are investing in. Novavax’s fate largely hinges on the company’s success in getting NVX-CoV2373/Nuvaxovid approved by regulators and then commercializing it. It is certainly not an easy task.
It is true that Novavax has succeeded in having its Covid-19 vaccine authorized in several major world markets, including the European Union, Australia, Canada and Britain. This, however, did not prevent a sell-off in NVAX shares.
Perhaps a closer look at Novavax’s financial situation could help bolster the bullish case. So, let’s see what the data reveals.
Room to go lower
On the positive side of the equation, Novavax recently had its first profitable quarter as a commercial enterprise. Unfortunately, Novavax’s first-quarter 2022 revenue of $704 million is lower than analysts’ consensus estimate of $845 million.
Apparently, these mixed results didn’t convince Bank of America Securities analyst Alec Stranahan to issue a bullish call on NVAX stock. He gave Novavax an “underperforming” rating with a price target of $35.
Stranahan cited a “bearish view on continued use of the C-19 booster, unclear benefit as a heterologous option, and waning immunity to new variants (i.e. Omicron)”. Therefore, he is considering a margin for Novavax shares to “trade even lower.”
What you can do now
Stranahan’s bearish call hits hard and his points are duly noted. The last thing anyone needs right now is to buy some NVAX stock and watch it slide to $35.
Of course, it’s great that Novavax had a profitable quarter. However, that probably won’t be enough to rekindle investors about Novavax. Therefore, it is wise to stay away, just in case the stock ends up trading “even lower”.
As of the date of publication, David Moadel had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.