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Citi initiated coverage of Novavax (NASDAQ:NVAX) with a sell rating and a $6.00 price target on Tuesday, citing concerns about the company’s strategic shift in recent years. The stock, currently trading at $7.03, has shown significant volatility with a beta of 2.77, according to InvestingPro data.
The research firm noted that Novavax has evolved from its earlier focus as a commercial company centered solely on its Covid-19 vaccine, which launched in 2022 and reached peak revenues of $2 billion. While the company maintains strong financials with a gross profit margin of 58.4% and revenue of $1.25 billion in the last twelve months, InvestingPro analysis indicates the company is quickly burning through cash. The vaccine utilized Novavax’s recombinant protein-based nanoparticle technology and its proprietary Matrix-M adjuvant.
Novavax expanded its commercial portfolio in May 2024 when it shipped its first doses of a malaria vaccine targeting the R21 antigen and incorporating its adjuvant compound. This second product was developed primarily for low-income countries with endemic malaria.
With its platform technology now proven, Novavax entered a licensing agreement with Sanofi (NASDAQ:SNY) that includes rights to its Covid vaccine, Covid+flu combination development, and other vaccines, according to Citi’s research note.
Citi classified its recommendation as "Sell/High Risk" in its coverage initiation, signaling significant concerns about Novavax’s current valuation and business direction despite the company’s expanded product portfolio and technology licensing deals.
In other recent news, Novavax Inc. announced positive results from its Phase 3 trial for its COVID-19-Influenza Combination (CIC) and standalone trivalent influenza vaccine candidates. These vaccines demonstrated robust immune responses in adults aged 65 and older, with no new safety concerns identified. Furthermore, Novavax has secured FDA approval for its COVID-19 vaccine, Nuvaxovid, for use in adults over 65 and those aged 12 to 64 with high-risk conditions, triggering a $175 million milestone payment from Sanofi. The company plans a Phase 4 trial to evaluate the vaccine’s efficacy and safety further. Meanwhile, JPMorgan has maintained an Underweight rating on Novavax stock, with a price target of $7, despite the recent FDA approval. The analyst noted that Nuvaxovid sales are expected to be minimal in 2025, with a clearer market reception anticipated in 2026. Additionally, the FDA has announced new trial requirements for COVID-19 boosters for healthy individuals under 65, which could impact the availability of these boosters. Novavax’s vaccine has been available under Emergency Use Authorization in the U.S. since July 2022 and has full market approvals in several major regions.
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