Novavax Is Down By 6%, Here Is Why

Key Insights

• Novavax vaccine gets approval in Japan, but the news fails to provide any support to the stock. 
• Vaccine stocks remain under pressure as traders worry that demand for coronavirus vaccines will decline in the upcoming years. 
• Novavax is cheap at just 4 forward P/E, but falling earnings estimates signal that analysts remain concerned about the company’s future performance. 

Novavax Stock Declines Amid Broad Weakness In Vaccine Stocks

Shares of Novavax  moved to yearly lows after Japanese Health Ministry committee approved the company’s coronavirus vaccine.

While the news is positive for Novavax, the market believes that the company is “late to the party”. The world’s focus is moving away from the coronavirus pandemic, and it remains to be seen whether vaccines will enjoy strong demand in 2023 and beyond.

Shares of other vaccine makers are also under pressure during the current trading session. Moderna stock is down by 4%, while BioNTech stock is down by almost 7%.

It should be noted that recent reports about a potential waiver of intellectual property rights for coronavirus vaccines and treatments also put pressure on vaccine-related stocks.

What’s Next For Novavax Stock?

Analysts expect that Novavax will report earnings of $22.84 per share in the current year and earnings of $14.36 per share in the next year, so the stock is trading at just 4 forward P/E.

However, analyst estimates have declined materially in recent months, and traders are worried that they could move lower. In addition, it is not clear whether demand for coronavirus vaccines will stay strong in the upcoming years.

Earnings visibility is a problem for all vaccines makers, but Novavax stock is under more pressure as the company’s vaccine has lost competition for market share.

In this light, it remains to be seen whether speculative traders will try to “catch the falling knife” and buy Novavax stock at yearly lows. At this point, it looks that the stock has a good chance to develop additional downside momentum in the upcoming trading sessions.

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