Why Novavax Stock Is Down By 8% Today

Novavax Stock Is Under Pressure After Company Announces At-The-Market Equity Offering

Shares of Novavax gained downside momentum after the company announced that it reached agreement with B.Riley Secutiries for an at-the market offering of up to $500 million of its common stock.

Novavax noted that the company sold 1.7 million shares since January 22, 2021, and raised $451.9 million in net proceeds. The average sales price was $271.65 per share, so the company used the huge rally at the beginning of February to sell its stock at a good price.

Novavax has recently reported that its COVID-19 vaccine showed efficacy of 90.4%, but this announcement failed to provide additional support to the stock as traders took profits after the rally which took the company’s shares from the $120 level to the $230 level.

What’s Next For Novavax Stock?

Some traders will certainly use the announcement of the at-the-market equity offering program as an excuse to take some profits off the table after the recent upside move.

Some questions also remain on the fundamental front. The market for COVID-19 vaccines in developed countries has been divided between major players, so Novavax will likely have to search for consumers in less developed countries which may lead to lower prices. In addition, it remains to be seen whether Novavax will be able to quickly produce its vaccine in large quantities.

I’d note that analyst estimates have been trending down in recent weeks. Currently, analysts expect that Novavax will report a loss of $6.42 per share in 2021. In 2022, the company is projected to report a profit of $30.21 per share, so the stock is trading at about 6 forward P/E for 2022.

However, earnings visibility is low as it is not clear whether strong demand for COVID-19 vaccines will remain strong in 2023 and beyond and whether those who have been already vaccinated will need booster shots. In this light, the stock will likely remain highly volatile and sensitive to any news about the speed of vaccine production.

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