Why Novavax Stock could skyrocket in December


Ddo not forget Novavax (NASDAQ: NVAX). It might be easy for investors to do this. The company’s COVID-19 vaccine is still not licensed in any major market. Its shares are more than 30% below the peak reached earlier this year and remain 20% below where they were trading just three months ago.

But I think there is a very good chance that Novavax is about to take off soon. Here’s why Novavax’s stock could skyrocket in December.

Image source: Getty Images.

Omicron uncertainties

The World Health Organization (WHO) added the omicron variant to its list of variants of concern last week. This movement shook the stock market. However, he also started a fire under vaccine stocks, including Novavax.

Why worry about the omicron variant? It is possible that the high number of mutations in the spike protein with this variant could make the strain of coronavirus more contagious than ever.

But every problem presents an opportunity. In this case, there could be an increased demand for effective vaccines against the omicron variant. Novavax has already revealed that it is developing a version of its COVID-19 vaccine that specifically targets the variant.

However, investors shouldn’t be putting the cart before the horse. Concerns about the omicron variant could be premature. However, there is likely to be some uncertainty for a few weeks. Interest in vaccine stocks is likely to increase during this period. This is good news for Novavax.

Multiple potential catalysts

I suggested it was it’s time to buy Novavax after the company’s third quarter update in early November. It was long before anyone had heard of the omicron variant. All of the reasons I was bullish on the stock at the time are still in place. More importantly, Novavax has several potential catalysts on the way.

Novavax has now filed for authorization or approval in Australia, Canada, the European Union, New Zealand, Singapore and the United Kingdom for the COVID-19 vaccine NVX-CoV2373. It is submitted for an emergency use list with the WHO. Additionally, the company and its partner, SK bioscience, have applied for vaccine approval in South Korea.

There can be no assurance that decisions will be made in December. However, it is possible that Novavax will add more regulatory approvals this month in addition to its Emergency Use Authorization (EUA) victories in Indonesia and the Philippines. The European Medicines Agency said a marketing authorization “could be issued within weeks” after receiving Novavax’s application on November 17.

Novavax also plans to file an EUA application in the United States for NVX-CoV2373 by the end of the year. This bid could provide a spark for the stock alone.

The momentum towards the new year?

The 12-month consensus price target for Novavax reflects a premium of nearly 20% over the current share price. But I think analysts might be too pessimistic about Novavax’s outlook.

On the one hand, a 20% jump would still leave Novavax’s valuation well below other vaccine stocks based on multiple futures prices / sales. More importantly, Novavax is ahead of its rivals in the development of a combined influenza-COVID vaccine.

Of course, there are potential scenarios in which Novavax does not rise significantly. The company could again delay its filing for EUA in the United States. It could receive a favorable opinion from regulators in other countries.

I’m not looking for these scenarios to unfold, however. I think Novavax stock could skyrocket in December with positive regulatory developments. I also expect the momentum to carry over into the New Year.

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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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