Yahoo Finance Market Sentiment Around Loss-Making Novavax, Inc. (NASDAQ:NVAX)
With the business potentially at an important milestone, we thought we'd take a closer look at Novavax, Inc.'s (NASDAQ:NVAX) future prospects. Novavax, Inc., a biotechnology company, focuses on the discovery, development, and commercialization of vaccines to prevent serious infectious diseases and address health needs. The US$1.3b market-cap company posted a loss in its most recent financial year of US$1.7b and a latest trailing-twelve-month loss of US$1.3b shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Novavax will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
View our latest analysis for Novavax
According to the 6 industry analysts covering Novavax, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$112m in 2023. Therefore, the company is expected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 49% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Novavax's growth isn’t the focus of this broad overview, though, keep in mind that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with Novavax is it currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. These losses tend to occur only on paper, however, in other cases it can be forewarning.
Next Steps:
This article is not intended to be a comprehensive analysis on Novavax, so if you are interested in understanding the company at a deeper level, take a look at Novavax's company page on Simply Wall St. We've also put together a list of key factors you should further research:
Valuation: What is Novavax worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Novavax is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Novavax’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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