Novavax (NVAX): Exploring Valuation After Analyst Upgrades and Renewed Investor Interest

Novavax (NVAX) is catching the attention of many investors lately, and it is not just because of another biotech headline. The spark this time comes from a wave of analyst upgrades, with recent earnings estimates being revised higher. These shifts are fueling optimism around Novavax's growth story, leaving investors wondering if the momentum can last and whether there is more upside ahead. Shares have seen a jump of over 14% in the past month, after spending much of the year treading water. That momentum stands out, especially as Novavax’s long-term performance has struggled, with the stock still down substantially over the past year and longer periods. The analyst activity, combined with Novavax continuing to show a solid momentum profile, suggests that risk perceptions may be shifting and sentiment could be improving. With the stock finally on the move after months of little change, the key question is whether this is the start of a sustained run or if the market is already pricing in what comes next. Is Novavax undervalued even after these gains, or is further growth already factored into its price?

Most Popular Narrative: 31.6% Undervalued

According to the most widely followed narrative, Novavax shares are undervalued by a sizeable margin, based on analysts’ financial projections and discount rates.

The successful commercialization of the R21 Matrix-M malaria vaccine, already deployed in 12 African countries with over 20 million doses sold, showcases the potential for expanding sales in underserved infectious disease markets. This could increase both revenues and operating leverage through economies of scale.

Wondering what kind of bold assumptions power a fair value that is so far above today's market price? The narrative hinges on dramatic forecast changes for profit margins and future earnings, with a valuation model that even beats sector averages. Eager to see which numbers unlock that optimism? The drivers hiding under the surface just might surprise you.

Result: Fair Value of $12.50 (UNDERVALUED)

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

However, key risks remain, including partner delays or falling COVID vaccine demand. Either of these factors could sharply limit Novavax’s expected upside.

Find out about the key risks to this Novavax narrative.

Another View: Discounted Cash Flow Perspective

Taking a step back from analyst estimates, our DCF model presents a much more conservative outlook for Novavax. This approach suggests the shares are not undervalued and challenges the optimism of the first method. Which view will win out?

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 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 want to challenge these perspectives or draw your own conclusions from the numbers, you can build your personal Novavax story 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 1 important warning sign 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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