Actions of Novavax (NVAX -13.26%) were plunging 26.3% this week at the close of the market on Thursday, according to data provided by S&P Global Market Intelligence. Two factors contributed to the poor performance.
First, the stock market in general has collapsed as investors worry about the Federal Reserve’s latest interest rate hike. This move weighed on most stocks. Novavax was no exception.
According to, JPMorgan Chase analyst Eric Joseph downgraded the vaccine title from neutral to overweight (which means: it will probably get better in the future). Joseph also reduced his 12-month price target on Novavax from $ 132 to $ 27.
Analysts don’t always make the right calls with their ratings. However, there are legitimate reasons to be concerned about Novavax’s short-term outlook. Notably, COVID-19 vaccinations are essentially unchanged in the United States. The number of COVID-19 cases has decreased. Demand for Novavax’s Nuvaxovid vaccine is likely to be low.
Perhaps the situation for Nuvaxovid will improve somewhat in Europe. The European Commission recently expanded the conditional marketing authorization for use of the vaccine as a booster. However, Novavax is still awaiting US authorization to use Nuvaxovid as a booster.
Novavax hopes to apply for the authorization of its booster targeting the omicron variant of the coronavirus in the fourth quarter of this year. If there is another wave of COVID-19 cases this winter, it is possible Novavax could win further supply deals.
In the long run, the market could shift to combination vaccines that provide protection against COVID-19 and flu viruses. Novavax could be a leader in the combined market. The company plans to advance its COVID combined flu vaccine candidate into the final phase of testing in 2023.
JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Keith Speights has no position in any of the titles mentioned. The Motley Fool has no position in any of the titles mentioned. The Motley Fool has a disclosure policy.