Novavax: Implied upside of 600%
The comeback story of the year, at least based on the price target of one Wall Street analyst, may be biotech stock Novavax (NVAX 0.62%). Despite tumbling more than 98% from its all-time high, H.C. Wainwright analyst Vernon Bernardino foresees shares of Novavax catapulting to $35. This would represent a 600% increase from the $5 shares closed at on Jan. 5.
Perhaps the biggest pendulum swing for Novavax is pending arbitration concerning orders for its COVID-19 vaccine with Gavi, a nongovernmental global vaccine organization. Gavi is seeking $700 million following the cancellation of a contract with Novavax for 350 million doses of its COVID-19 vaccine. If Novavax owes nothing, its financial foundation would be greatly improved. Meanwhile, if it has to pay $700 million to Gavi, its ability to continue as a solvent company may come into question.
Cost-cutting is another big catalyst in 2024 for Novavax. The company practically halved its operating expenses through the first nine months of 2023 -- a $950 million reduction when compared to the comparable period in 2022 -- and has plans to slash another $300 million in full-year costs in the new year. If Novavax can meet these aggressive cost-cutting goals, it should meaningfully reduce its rate of cash burn.
The other wild card here is figuring out what happens with COVID-19 vaccine demand. Novavax used traditional methods to develop a protein-based vaccine, which is markedly different than the messenger-RNA vaccines developed by Moderna and Pfizer/BioNTech. If Novavax were to see stronger demand for its COVID-19 vaccine, or gather momentum as it kicks off late-stage studies for a combination vaccine (influenza and COVID-19), it's possible shares could enjoy significant upside in the new year. While I'm not nearly as bullish on Novavax as Bernardino, a triple-digit gain could be in the cards in 2024 if things fall Novavax's way.
