Novavax (NVAX) says there is “substantial doubt” about its ability to continue, and NVAX stock tumbled on Wednesday.
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The statement came on the heels of light sales and larger than expected losses. In the December quarter, the company reported revenue of $357 million, representing growth in its Covid vaccine, Nuvaxovid, offset by lower revenue from grants, royalties and other sources. Sales increased by 61%.
Novavax also lost $2.28 per share, compared to a loss of $11.18 per share a year ago, but lacks projections for a loss per share of $1.01, according to FactSet.
Now the company says it plans to focus on developing an updated version of its Covid vaccine, in line with advice from public health officials. But the company warned that there is “significant uncertainty” regarding 2023 revenue, US government funding and ongoing arbitration.
“Given these uncertainties, substantial doubt exists as to our ability to continue our business for one year from the data on which these financial statements are published,” Novavax said in its press release.
In response, NVAX stock fell 24.8% around 7 a.m. on the stock market today. Ahead of Tuesday night’s announcement, shares closed up 6.8% at 9.26.
Stock NVAX: Lookahead is murky
Novavax currently only sells one drug, the Covid vaccine. But Covid vaccinations in the United States are declining. Pfizer (EFP) and Modern (MRNA) made small sales gains for their Covid vaccines in 2022, although sales are expected to fall this year.
It is important to note that Novavax uses a different way to vaccinate patients. While Pfizer’s and Moderna’s injections rely on messenger RNA platforms, Novavax’s is protein-based. The Food and Drug Administration has authorized Novavax’s vaccine as a primary series for people ages 12 and older, and as a booster for adults.
This year, new chief executive John Jacobs said the company plans to deliver an updated Covid vaccine ahead of the 2023 vaccination season. Novavax also hopes to reduce expenses, manage cash flow and scale/structure. Additionally, he hopes to strengthen his portfolio “to create additional value beyond Nuvaxovid alone.”
Analysts have a mixed view of 2023
But analysts are mixed on 2023 expectations for Novavax. They are claiming $4.99 per share in losses. That would come down from a loss of $8.42 per share in 2022. But they also call for a 36% drop in sales to $1.26 billion, according to FactSet.
This would be in line with Pfizer and Moderna’s expectations. Both companies expect sales of their Covid vaccines to decline in 2023. Vaccinations are slowing and the public health emergency in the United States is now expected to end in May.
Meanwhile, NVAX stock has the worst possible relative strength rating of 1. This puts the stock in the bottom 1% of all stocks when it comes to 12-month performance, according to IBD Digital.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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