ResVax, NanoFlu Prospects Earn Novavax A Double Upgrade

Novavax, Inc. NVAX has fallen 31 percent over the last six months, mirroring waning investor excitement over a coming pivotal trial. Amid the heavy sell-off, one analyst sees a buying opportunity.

The Analyst

JPMorgan analyst Eric Joseph upgraded Novavax from Underweight to Overweight and sees fair valuation between $2 and $2.25.

The Thesis

Novavax’s PREPARE Phase 3 trial is set to release pivotal data on ResVax in the first quarter. JPMorgan expects the immunization for infant RSV to yield positive results driving 50-100-percent-plus upside.

While a failure could drag the stock down 80 percent, Joseph said he considers such an outcome less likely. (See his track record here.) 

“Looking beyond the Phase 3 readout, we believe positive PREPARE data would support broader development to additional at-risk populations and their inclusion in the model." 

If successful, ResVax would tap into a $650 million to $850 million opportunity in the U.S., by Joseph’s estimates.

The analyst projects a $200-million peak opportunity in NanoFlu, which is set to enter a Phase 2 study in the third quarter and release top-line data in the first. If successful, Novavax could pursue registration in the second half of next year.

Price Action

Novavax shares were up 6.46 percent at $1.56 at the time of publication Friday. 

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