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Novavax, NVAX, Misses Big Time – Is The Vaccine Boom Over?

Tim Worstall
Tim Worstall trader
Updated 9 Aug 2022

Trade Novavax Stock Your Capital Is At Risk

Key points:

  • Novavax stock dropped 35% after reporting Q2 numbers
  • This included a revenue miss which can be counted as high as an 83% undershoot
  • The underlying though is what does this say about the covid vaccine market?

Novavax (NASDAQ: NVAX) stock dropped 35% after it released Q2 2022 earnings. NVAX is now down 73% over the past 12 months which, really, isn't quite the performance we'd expect of a vaccine maker in a pandemic. The problem is that there are many vaccine makers and that does mean that those possibly late to the party don't gain big sales nor make big profits. It's worth pointing out that there's nothing actually wrong with the Novavax covid solution – just that it's not doing very well.

The results were, to put this mildly, a massive miss. Some Wall Street analysts were suggesting revenues of as much as a $billion for the quarter and they came in at $186 million – that's a $834 million miss. Or, to put it another way, an 83% miss, which is pretty large even by pharmaceutical company standards. This is also a significant decline from Q1, when product sales were $586 million, down to $55 million for Nuvaxovid, that covid vaccine. Oh, and of course the profit of $203 million in Q1 rather reversed to a loss of $510 million. None of thick are figures likely to increase the value of a company now, are they?

What's made it all rather worse is that future guidance for NVAX is also lowered. The prior outlook was for $4 billion to $5b, that's now been lowered to $2b to $2.3b. It's not expected that the profit line is going to look much good with revenues that far down – they're missing the consensus forecast of $4.3 billion revenue after all.

Novavax Stock Price
Novavax Stock Price from IG

Also Read: Five Best Pharmaceutical Stocks to Watch in 2022

But what is it that has brought Novavax to this pretty pass? What's worrying certain stock market analysts is that this is the signal that the vaccine party is over. Sure, some people got to market really fast – Pfizer, Moderna – and have had startlingly large and profitable sales. That's great – but then comes the free market part of the system. Sure, the capitalists make out like bandits but new market entrants do come along. That collapses margins for those early birds. Here at Novavax we're looking at one of those followers. As all agree there's nothing actually wrong with their vaccine. Works just fine, better than many others in fact. It's just late.

The hurried scrambles by governments for vaccines are now over. People just aren't throwing cash at anything that works any more. Nuvaxovid has all the approvals necessary to make sales in the large markets. But it's just not making all that many because there are so many choices for buyers.

Note what this means for us as investors. We're not saying that covid is entirely over. Nor do we mean that people won't get jabbed, or that there won't be boosters and so on. Instead the point is that margins on the business are falling to disappearing. But we being capitalists that's what we're interested in – profits, the bottom line. Another way of putting this is just that Novavax was late to market. Well, there's a pity but that's just the way it is.

Tim Worstall
Tim Worstall is a freelance writer specialising in economics and the financial markets.