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Buy Novavax Because It Could Be About to Score With J&J’s Covid-19 Vaccine on the Sidelines

A sample from the Novavax Phase 3 Covid-19 clinical vaccine trial.

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Novavax could begin “generating a bottom-line profit in the second half of 2021,” an analyst at CFRA wrote, initiating coverage on the Covid-19 vaccine developer with a Strong Buy rating.

Novavax (ticker: NVAX) has presented surprisingly positive results from trials of its Covid-19 vaccine, which demonstrated 96.4% efficacy against all symptomatic Covid-19 cases caused by the original strain of the virus in a large U.K. study. The company is now preparing to file for an Emergency Use Authorization from the U.S. Food and Drug Administration.

In her note, published Thursday, CFRA analyst Sel Hardy wrote that she expects emergency authorization to be granted quickly.

“We expect NVAX to generate roughly $1.4 billion revenue in the third quarter, up from $555 million in the second quarter, and close 2021 with $4.6 billion in total sales based on the assumption of successful approvals of its Covid-19 vaccine candidate and its fast commercialization,” Hardy wrote.

She said that the company’s Covid-19 vaccine sales could be even higher this year, if other agreements come through, pushing vaccine revenues to more than $6.6 billion.

That’s not bad for a company that four months into the year, has no commercialized products whatsoever.

Novavax shares were up 0.1% in premarket trading on Friday, after rising 0.4% on Thursday. The stock is up 81.2% so far this year, and nearly 1,000% over the past 12 months. Of the five analysts tracked by FactSet who cover the stock, all have Buy ratings.

In her note, Hardy set a 12-month target for the stock price of $250. The stock closed Thursday at $202.09.

Hardy noted that Novavax’s Covid-19 vaccine has advantages over those of Moderna (MRNA) and Pfizer (PFE), in that its storage requirements are less stringent. “The easier storage and handling conditions also offer a competitive advantage to NVAX, particularly in an environment where the main competitors with similar storage advantages, the adenovirus-based Covid-19 vaccine makers AstraZeneca and Johnson & Johnson, are facing issues regarding blood clots following inoculations and halted their distribution,” she wrote.

She also wrote that Novavax has begun developing boosters to target specific new strains of the virus that causes Covid-19.

Beyond Covid-19, Hardy highlighted the company’s experimental flu vaccine, now in Phase 3 trials. “The influenza vaccine, NanoFlu, in Phase 3 clinical trials, offers vast market opportunities,” Hardy wrote.

Novavax shares have climbed dramatically in recent months, with single-day gains of 10.8% on Tuesday and 3.4% on Wednesday. But Hardy wrote that the stock remains “attractively valued.”

“We think there is still a strong upside potential,” she wrote.

Write to Josh Nathan-Kazis at [email protected]

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