On Monday, B.Riley adjusted its outlook on Novavax (NASDAQ:NVAX), reducing the price target to $22.00 from the previous $26.00 while maintaining a Buy rating on the stock. The firm's analyst cited a mixed fourth-quarter guidance and a market share trend for Nuvaxovid that appears to be lower than the aspirational goal for the 2024-25 season. Despite this, Novavax's sales performance remains robust compared to previous years, especially against mRNA COVID-19 market leaders.
The company's third-quarter top-line and EPS results, reported last week, surpassed consensus expectations. Novavax's management has highlighted the ongoing transformation of the business model. This change is facilitated by a strategic transaction with Sanofi (NASDAQ:SNY), which will take over the commercial rights starting in the fiscal year 2025-26. The shift will enable Novavax to focus on research and development, particularly on its Matrix-M adjuvant technology platform.
Novavax is advancing two vaccine candidates, a COVID-19-Influenza Combination (CIC) vaccine and a standalone flu vaccine, into Phase III trials that are registration-enabling, safety, and immunogenicity-focused, following the recent lift of an FDA clinical hold. Although there is an expected delay to Phase III initiation activities, pivotal data is anticipated in 2025. This data could position the CIC vaccine on par with competitors and the standalone flu candidate as a leader in the next generation of high-efficacy flu vaccines.
The analyst also noted Novavax's ongoing cost-cutting measures aimed at restructuring long-term operational expenses. The company's strategic intent remains on early-stage pipeline development, including RSV combination, H5N1, pandemic flu, and seeking business development opportunities that could provide a mix of cash influx and durable royalty streams.
The revision of the price target reflects modest near-term revenue adjustments and potential risks to vaccine uptake under a new administration. Despite these adjustments, there remains significant opportunity within the long-term estimate for the flu and COVID-19 marketplace, particularly with Novavax's differentiated products targeting the premium-priced elderly segment.
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