Novavax (NASDAQ:NVAX) shares plummeted over 26% intra-day today after JPMorgan analysts downgraded the stock from Neutral to Underweight. This downgrade follows a significant period of outperformance for Novavax, with its stock surging 267% since announcing a strategic partnership with Sanofi for its COVID-19 vaccine program, Nuvaxovid, on May 10.
The initial financial uplift came from a $500 million upfront milestone payment, which helped address concerns about the company’s financial stability. However, JPMorgan analysts now believe the current stock price "substantially overvalues" the potential revenue that Nuvaxovid could bring to Novavax.
Despite the excitement around combination COVID-19 and flu vaccines (CICs) and their potential to expand the respiratory vaccine market, analysts remain cautious. They anticipate that the demand for COVID-19 vaccines will be significantly lower than that for flu vaccines.
Developing CIC candidates is viewed as a strategy either to replace declining COVID-19 revenue streams or to protect existing flu vaccine markets. This tempered outlook contributed to the analysts’ decision to downgrade the stock, reflecting a more conservative perspective on Novavax's future revenue potential.