Earnings Update: Here's Why Analysts Just Lifted Their Novavax, Inc. (NASDAQ:NVAX) Price Target To US$22.00

The analysts might have been a bit too bullish on Novavax, Inc. (NASDAQ:NVAX), given that the company fell short of expectations when it released its yearly results last week. It was a pretty negative result overall, with revenues of US$984m missing analyst predictions by 3.0%. Worse, the business reported a statutory loss of US$5.41 per share, much larger than the analysts had forecast prior to the result. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Novavax

Following the recent earnings report, the consensus from five analysts covering Novavax is for revenues of US$777.9m in 2024. This implies a stressful 21% decline in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 90% to US$0.40. Before this earnings announcement, the analysts had been modelling revenues of US$853.9m and losses of US$0.48 per share in 2024. Although the revenue estimates have fallen somewhat, Novavax'sfuture looks a little different to the past, with a favorable reduction in the loss per share forecasts in particular.

There was a decent 13% increase in the price target to US$22.00, with the analysts clearly signalling that the expected reduction in losses is a positive, despite a weaker revenue outlook. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Novavax at US$38.00 per share, while the most bearish prices it at US$4.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 21% by the end of 2024. This indicates a significant reduction from annual growth of 47% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 18% annually for the foreseeable future. It's pretty clear that Novavax's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, long term profitability is more important for the value creation process. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Novavax. Long-term earnings power is much more important than next year's profits. We have forecasts for Novavax going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Novavax has 5 warning signs (and 2 which can't be ignored) we think you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.