Should You Buy Novavax Stock After A Large 18% Fall In 5 Days?

NVAX: Novavax logo
NVAX
Novavax

The stock price of Novavax (NASDAQ: NVAX) has seen a large 18% drop in just five trading sessions. The decline was driven partly due to the company’s announcement that it doesn’t plan to file for authorization for its Covid-19 vaccine in the U.S. and Europe until Q3 of this year. This didn’t bode well with the investors and the stock plunged around 9% in Monday’s trading session (May 10), and it is down another 12% in after trading hours. Novavax, despite having a head start in the vaccine race, and developing a highly effective Covid-19 shot, is yet to commence commercial deliveries, due to the slow regulatory process and production-related issues.

Even before this development, NVAX stock had seen a decline. In fact, it is down 28% over the last ten trading sessions. This can be attributed to a broader decline in vaccine developing stocks, after the U.S. backed the waiver of patent protection for Covid-19 vaccines. However, the benefits of patent waiver are debatable, given that vaccine production is complex and relies upon limited raw material sources, and it could take a while for generic companies, even if they gain access to the required IP, to scale up capacity quickly, which is the eventual goal of the waiver. In fact, availability of raw materials has been a caveat for a company like Novavax in meeting its manufacturing targets, and it will be even more difficult for generic companies.

But now that the stock has fallen 18% in just five days, will NVAX stock resume its downward trajectory over the coming weeks, or is a rise in the stock imminent? We believe that the stock will rebound in the near term. Firstly, Novavax’s management has recently stated that the manufacturing hurdles the company has been facing have been cleared and that all of its facilities can now produce the Covid-19 vaccines at commercial scale. Secondly, Novavax vaccine is one of the most effective vaccines against the coronavirus, with 96.4% efficacy against the  original strain of Covid-19 and 86.3% efficacy against B.1.1.7 variant strain in the UK, making it one of the most sought for vaccines currently. In fact, Novavax has already committed 1.1 billion doses under the Covax international vaccine sharing program. Lastly, NVAX has already seen a large correction in a matter of days, and using the recent trend (18% fall in a week) and ten years of historical stock data, the Trefis AI engine finds that NVAX stock will likely move higher over the next one month (twenty-one trading days). 

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According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price using historical stock data, returns for NVAX stock average around 5.0% in the next one-month (twenty-one trading days) period after experiencing a 5% fall in a week (five trading days). Notably, though, the stock is likely to beat S&P500 returns by 3.6% over the next month (twenty-one trading days).

But how would these numbers change if you are interested in holding NVAX stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Novavax stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF NVAX stock moved by -5% over five trading days, THEN over the next twenty-one trading days, HOLX stock moves an average of 5.0%, which implies an excess return of 3.6% compared to the S&P500.

Some Fun Scenarios, FAQs & Making Sense of Novavax Stock Movements:

Question 1: Is the average return for Novavax stock higher after a drop?

Answer: Consider two situations,

Case 1: Novavax stock drops by -5% or more in a week

Case 2: Novavax stock rises by 5% or more in a week

Is the average return for Novavax stock higher over the subsequent month after Case 1 or Case 2?

NVAX stock fares better after Case 2, with an average return of 5.2% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 7.1% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Novavax stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer: If you buy and hold Novavax stock, the expectation is over time the near term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

Question 3: What about the average return after a rise if you wait for a while?

Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although NVAX stock appears to be an exception to this general observation.

It’s pretty powerful to test the trend for yourself for Novavax stock by changing the inputs in the charts above.

While NVAX stock can see a rebound, it is helpful to see how its peers stack up. View Johnson & Johnson Stock Comparison With Peers to see how JNJ stock compares against peers on metrics that matter. You can find more such useful comparisons on Peer Comparisons.

See all Trefis Price Estimates and Download Trefis Data here

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