On May 19, JPMorgan analyst Eric Joseph reaffirmed an Underweight rating for Novavax Inc. (NASDAQ: NVAX) with a price target of $7. This decision follows the approval of the company’s COVID-19 vaccine by the Food and Drug Administration (FDA), though the approval comes with limitations.
FDA Approval and its Limitations
Joseph highlighted that the FDA approval represents a solid near-term win for Novavax, particularly with the anticipated milestone payment of $225 million from Sanofi. However, the approval is restricted to older and high-risk adults only, and it requires a post-marketing commitment for a phase 4 efficacy study. Novavax management believes that the incremental costs related to this study will have a neutral impact on operating expenses through 2027.
Minimal Vaccine Sales Expected in 2025
Joseph justified his Underweight rating, anticipating minimal sales of the vaccine in 2025. The analyst noted that the company views 2025 as an educational or observational year. Additionally, he expects the vaccine’s market reputation will not gain traction until the second half of 2026. As a result, while the FDA approval is seen as a short-term success, it does not indicate strong market performance in the immediate future.
AI Stocks Offer Greater Potential
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