A pharmaceutical part, Novavax (NASDAQ:NVAX) has been in motion. In fact, NVAX stock has risen nearly three times as much since November of last year.
This jump is mainly due to the fact that the company’s Covid-19 vaccine is approaching commercial release. However, despite the price appreciation, I think there is still a lot of potential for this name.
Here’s what you need to know about NVAX stocks going forward.
NVAX stock: an important and unique vaccine
Recently, the NVAX share won a major victory when the European Union (EU) signed a supply contract with the pharmaceutical company for up to 200 million doses. I was initially puzzled as to why he would consider such a purchase. After all, the vast majority of EU countries already have at least 60-70% of their population fully vaccinated.
Well, the answer lies in the EU’s strategy to defend against future variants – as well as to prepare for possible callbacks. It is true that he uses vaccines produced by Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA). He also approved Astrazeneca (NASDAQ:AZN) and Johnson & johnson (NYSE:JNJ) doses. So, why use the shot from NVAX?
Novavax’s vaccine is unique in that it uses an alternative technology to what is currently on the market. Rather than being based on mRNA, it is a subunit protein vaccine. As such, it’s similar to an mRNA-based shot, but one key difference is that its coronavirus spike protein is already part of the dose. In addition, the Novavax vaccine contains a tree bark adjuvant which helps improve the patient’s immune response.
By purchasing the vaccine from Novavax, the European Union is diversifying its vaccine portfolio. This is especially important, given the variants of Covid-19 circulating around the world as well as potential future variants that may emerge. European Commission President Ursula von der Leyen noted the following about the NVAX deal:
“As new variants of the coronavirus spread in Europe and around the world, this new contract with a company that is already successfully testing its vaccine against these variants is an additional guarantee for the protection of our population. “
Considering the economic damage caused by the pandemic, this type of insurance is a small price to pay.
Gain traction despite the lack of approval
It should be noted that Novavax’s vaccine has not yet been approved by European regulators. However, I think the approval will only be a matter of time. At the moment, the only missing information the EU needs relates to chemicals, manufacturing and production-related controls. This delay was due to the change in “production strategy” of Novavax. Now the company has set its submission timeline between late September and early October.
Despite the current lack of approval, however, countries are more than willing to spend to secure supply. For example, Denmark announced that it would buy 280,000 doses. Novavax’s vaccine had a purchase price of about $ 20.90 per dose for a total contract of $ 5.84 million.
We can use this information to do a quick calculation on the back of the envelope of the value of the Global Supply Agreement. Priced at $ 20.90 per dose and 200 million doses, Novavax is expected to achieve potential revenue of $ 4.18 billion from the deal. It certainly means big things for the NVAX stock.
Takeaway for investors on NVAX stock
Using the numbers from that single European contract and the Sept. 15 price of $ 232.30, NVAX stock is trading at a forward price to sell (P / S) ratio of 4.14 times. I think this is a reasonable assessment for Novavax, given the strength of the company’s vaccine. And that assessment doesn’t even include the company’s potential deals with other countries.
At the end of the day, there are a lot of countries that need a vaccine. In addition, the delta variant continues to wreak havoc in these countries and elsewhere. People around the world will need an additional supply of vaccines.
That’s why I think NVAX stock is a buy around these levels.
At the date of publication, Joseph Nograles held a long position in NVAX and MRNA. The opinions expressed in this article are those of the author, submitted to InvestorPlace.com Publication guidelines.
Joseph Nograles is a part-time freelance writer specializing in the financial industry. He has worked in a wide variety of industries, from technology to consulting with one of the “big four”. He has always enjoyed analyzing businesses and has been a CFA charter holder for nearly a decade now.