Is Trending Stock Novavax, Inc. (NVAX) a buy it now?
Novavax (NVAX) has been one of the most searched stocks on Zacks.com lately. So, you might want to consider some of the facts that could shape the stock’s performance in the short term.
Over the past month, shares of this vaccine maker have returned -39.9%, compared to the -8.1% change in the Zacks S&P 500 composite. During this period, the industry Zacks Medical – Biomedical and Genetics, of which Novavax is a part, lost 7.1%. The key question now is: what could be the future direction of the title?
Although press releases or rumors about a substantial change in a company’s trading outlook will usually “trend” its stock and cause an immediate price change, there are always fundamental facts that ultimately dominate the take. purchase and retention decision.
Revisions to earnings estimates
At Zacks, we prioritize evaluating change in a company’s future earnings projection over anything else. This is because we believe that the present value of its future income stream is what determines the fair value of its stock.
Our analysis is primarily based on how sell-side analysts covering the stock revise their earnings estimates to reflect the latest trading trends. When a company’s earnings estimates increase, the fair value of its stock also increases. And when the fair value of a stock is higher than its current market price, investors tend to buy the stock, causing its price to rise. For this reason, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term movements in stock prices.
For the current quarter, Novavax is expected to post earnings of $3.33 per share, indicating a change of +209.2% from the prior year quarter. The Zacks consensus estimate has changed by +7.4% over the past 30 days.
For the current fiscal year, the consensus earnings estimate of $23.55 indicates a change of +200.5% from the prior year. Over the last 30 days, this estimate has changed by +3.1%.
For the next fiscal year, the consensus earnings estimate of $14.30 indicates a -39.3% change from what Novavax is expected to report a year ago. Over the past month, the estimate has changed by +103.2%.
With a strong externally audited track record, our proprietary stock rating tool, Zacks Rank, provides a more conclusive picture of a stock’s price direction in the short term, as it effectively harnesses the power of earnings estimate revisions. . Due to the magnitude of the recent consensus estimate change, along with three other factors related to earnings estimates, Novavax is ranked Zacks Rank #3 (Hold).
The chart below shows the evolution of the company’s consensus 12-month EPS estimate:
12 month EPS
Expected revenue growth
Although earnings growth is arguably the most superior indicator of a company’s financial health, nothing as such happens if a company is unable to increase revenue. After all, it is almost impossible for a company to increase its profits for an extended period of time without increasing its revenue. It is therefore important to know the potential revenue growth of a business.
For Novavax, the current quarter sales consensus estimate of $878.11 million indicates a year-over-year change of +96.3%. For the current and future fiscal years, the estimates of $4.56 billion and $3.49 billion indicate variations of +298.2% and -23.6%, respectively.
Latest reported results and history of surprises
Novavax reported revenue of $222.2 million last quarter, representing a -20.6% year-over-year change. EPS of -$11.18 for the same period versus -$2.70 a year ago.
Compared to the Zacks consensus estimate of $385.57 million, the reported revenue comes as a surprise of -42.37%. The EPS surprise was -681.82%.
The company couldn’t beat consensus EPS estimates for the past four quarters. The company exceeded consensus revenue estimates only once during this period.
Without considering the valuation of a stock, no investment decision can be effective. Crucial to predicting a stock’s future price performance is whether its current price accurately reflects the intrinsic value of the underlying business and the company’s growth prospects.
While comparing the current values of a company’s valuation multiples, such as the price-to-earnings (P/E) ratio, the price-to-sales (P/S) ratio, and the price-to-cash flow (P/CF) ratio , along with its own historical values help determine whether its stock is fairly valued, overvalued or undervalued, comparing the company against its peers on these metrics gives a good idea of the reasonableness of the stock price .
The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to traditional and unconventional valuation metrics to rank stocks from A to F (an A is better than a B; a B is better than a C; and so on), is quite useful in determining whether a stock is overvalued, correctly priced, or temporarily undervalued.
Novavax is rated B on this front, indicating that it is trading at a discount to its peers. Click here to see values for some of the rating metrics that led to this rating.
The facts discussed here and plenty of other information on Zacks.com might help determine whether it’s worth paying attention to the market buzz about Novavax. However, its No. 3 Zacks ranking suggests it could perform in line with the broader market in the near term.
Zacks names ‘only one best choice for doubling up’
From thousands of stocks, 5 Zacks experts have each picked their favorite to skyrocket by +100% or more in the coming months. Of these 5, Research Director Sheraz Mian selects one to have the most explosive advantage of all.
It’s a little-known chemical company that’s up 65% year-on-year, but still very cheap. With relentless demand, rising earnings estimates for 2022 and $1.5 billion for stock buybacks, retail investors could jump in at any moment.
This company could rival or surpass other recent Zacks stocks which are expected to double, such as Boston Beer Company which jumped +143.0% in just over 9 months and NVIDIA which jumped +175.9% in one. year.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.