Novavax (NVAX): Evaluating Valuation Gaps as Shares Extend Recent Slide

Novavax (NVAX) shares have seen recent movement, catching the attention of investors looking to understand what is driving the change. Over the past month, the stock is down 25%, prompting questions about underlying trends in the business.

See our latest analysis for Novavax.

Looking beyond the past month’s slide, Novavax shares have been under pressure for most of the past year, with a 1-year total shareholder return of -18.5% and an even steeper drop over the longer term. Recent declines suggest momentum remains subdued as investors reassess growth prospects and risk appetite at the current share price of $6.57.

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With shares trading well off their highs, some investors are asking whether Novavax is undervalued at these levels or if the market has already accounted for the company's future prospects and left little room for upside.

Most Popular Narrative: 49.9% Undervalued

According to the most widely followed narrative, Novavax's calculated fair value stands at $13.11, nearly double the closing price of $6.57. This substantial gap highlights an unusual disconnect between market expectations and consensus projections, setting the stage for high-stakes debate among investors and analysts alike.

The global vaccine market is expected to increase significantly, driven by factors such as aging populations and emerging infectious diseases. This expands Novavax's addressable market and supports long-term revenue growth. Partnership with Sanofi has de-risked commercial execution for Nuvaxovid and opened doors for future milestone and royalty streams, particularly as Sanofi develops and commercializes COVID-influenza combination vaccines. This could meaningfully boost Novavax's recurring revenue and net margins.

Read the complete narrative.

What’s fueling this big valuation gap? It comes down to bold projections about revenue declines, margin compression, and the assumption of a future profit multiple typically reserved for biotech standouts. Curious which numbers make analysts confident, even with negative growth? Uncover what powers this narrative's fair value calculation.

Result: Fair Value of $13.11 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, significant uncertainty remains if Novavax’s milestone payments are delayed or if COVID-19 vaccine demand drops faster than analysts anticipate.

Find out about the key risks to this Novavax narrative.

Another View: What Does the SWS DCF Model Say?

While analysts see Novavax as deeply undervalued based on future earnings multiples, our DCF model actually produces a more cautious estimate. It values Novavax at $4.63 per share, which is lower than the current price. This suggests that there may be less upside if cash flows disappoint in the years ahead. Does this DCF result challenge the bullish outlook, or is the market already bracing for setbacks?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Novavax for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 906 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Novavax Narrative

If you have your own perspective or want to dig deeper into the numbers, it's easy to craft your own story and conclusions in just a few minutes. Do it your way

A great starting point for your Novavax research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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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.

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