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Novavax (NVAX) Down 2.9% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Novavax (NVAX). Shares have lost about 2.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Novavax due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Q4 Earnings & Revenues Miss Estimates

Novavax incurred a loss of $2.28 per share for fourth-quarter 2022, which was significantly wider than the Zacks Consensus Estimate of a loss of 92 cents as well as our estimate of $1.80. In the year-ago quarter, NVAX posted a loss of $11.18 per share.

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Revenues for the quarter were $357 million, up 61% year over year. However, revenues missed the Zacks Consensus Estimate of $378 million as well as our estimate of $364.5 million.

Quarter in Detail

Novavax markets two versions of its COVID-19 vaccine, one marketed in partnership with the Serum Institute of India (Serum) under the trade name Covovax and another version produced by Novavax that is marketed under the trade name Nuvaxovid. In the United States, the vaccine is marketed as Novavax COVID-19 Vaccine, Adjuvanted.

During the fourth quarter of 2022, revenues were driven by the sales of Nuvaxovid products. Total sales from Nuvaxovid product sales were $288 million which beat the Zacks Consensus Estimate and our estimate of $258 million. Higher product sales helped offset a decline in grants, royalties and other revenues.

NVAX recorded $0.04 million of revenues from royalties and adjuvant sales to license partners, a substantial decline from the year-ago quarter’s revenue of $127.2 million.

Novavax’s grant revenues declined 26.8% year over year to $69.6 million for the same period.

In the reported quarter, research and development expenses were $258 million, down 73.2% year over year. The downside was primarily caused by a decrease in development activities relating to coronavirus vaccines and an increased amount of manufacturing network costs capitalized to inventory which previously were expensed to research and development.

Selling, general and administrative expenses rose 92.0% year over year to $162 million. The rise in expenses was driven by activities to support the commercialization of Novavax’s COVID-19 vaccine program.

As of Dec 31, 2022, Novavax had $1.34 billion of cash and cash equivalents compared with $1.28 billion as of Sep 30, 2022.

2023 Guidance

While management did not provide full year guidance, it did provide a brief update on when revenues from product sales are expected. Management does not expect to record any COVID-19 vaccine sales in first-quarter 2023. The company anticipates recording vaccine sales beginning in second-quarter 2023. Management expects the majority of product sales to occur in the second half of 2023.

Also, the company intends to bring down its combined SG&A and R&D expenditure to $370 million or less for the first-quarter 2023.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -101.55% due to these changes.

VGM Scores

Currently, Novavax has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Novavax has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Novavax belongs to the Zacks Medical - Biomedical and Genetics industry. Another stock from the same industry, Biogen Inc. (BIIB), has gained 0.7% over the past month. More than a month has passed since the company reported results for the quarter ended December 2022.

Biogen Inc. reported revenues of $2.54 billion in the last reported quarter, representing a year-over-year change of -6.9%. EPS of $4.05 for the same period compares with $3.39 a year ago.

For the current quarter, Biogen Inc. is expected to post earnings of $3.32 per share, indicating a change of -8.3% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.7% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Biogen Inc. Also, the stock has a VGM Score of D.

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