Shareholders in Novavax, Inc. (NASDAQ:NVAX) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. The market may be pricing in some blue sky too, with the share price gaining 20% to US$83.61 in the last 7 days. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
Following the upgrade, the most recent consensus for Novavax from its five analysts is for revenues of US$280m in 2020 which, if met, would be a major increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 44% to US$2.15. Yet before this consensus update, the analysts had been forecasting revenues of US$186m and losses of US$2.42 per share in 2020. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.
It will come as no surprise to learn that the analysts have increased their price target for Novavax 28% to US$75.80 on the back of these upgrades. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Novavax, with the most bullish analyst valuing it at US$106 and the most bearish at US$38.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Novavax's past performance and to peers in the same industry. For example, we noticed that Novavax's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow manyfold, well above its historical decline of 6.4% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 25% per year. So it looks like Novavax is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Novavax is moving incrementally towards profitability. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Novavax.
These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 2 potential risk with Novavax, including major dilution from new stock issuance in the past year. You can learn more, and discover the 1 other risk we've identified, for free on our platform here.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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