Celebrations may be appropriate for Novavax, Inc. (NASDAQ: NVAX) shareholders, with analysts vastly improving their legal estimates for the company. The analysts have significantly increased their sales estimates, indicating a significant improvement in the fundamentals of the business. Investors were pretty bullish on Novavax, too, with its stock rising 19% to $ 316 over the past week. We’ll be curious to see if these new estimates convince the market to push the share price even further.
After the upgrade, the four Novavax analysts are forecasting sales of $ 4.0 billion in 2021, which would reflect a significant improvement in sales compared to the previous 12 months. The losses are expected to go away in the next year, with earnings projected at $ 24.16 per share for the next year. Prior to this update, analysts had forecast sales of $ 3.4 billion and earnings per share (EPS) of $ 16.90 in 2021. So we can see that analyst sentiment has risen significantly lately in both sales and earnings per share according to the latest estimates.
Check out our latest analysis for Novavax
It won’t be surprising to learn that as a result of these upgrades, analysts increased their price target on Novavax by 28% to $ 242. It could also be instructive to look at the range of analyst estimates to assess how different the outlier opinions are from the mean. There are a few different perceptions about Novavax, with the most bullish analyst rating it at $ 338 and the most bearish at $ 75.00 per share. Given the wide range of price targets, the analysts are almost certainly expecting very different results for the underlying business. As a result, it may not be possible to infer much meaning from the consensus price target, which is, after all, only an average of this wide range of estimates.
These estimates are interesting, but it can be useful to draw some broader lines when you see how the projections compare to both the Novavax’s past performance and peers in the same industry. The latest estimates suggest that Novavax’s growth rate is expected to accelerate significantly. The forecast 19-fold sales growth is noticeably faster than the historical growth of 27% pa over the last five years. In contrast, our data suggests that other companies (with analyst coverage) in a similar industry are expected to grow their sales 21% per year. It seems obvious that while the growth outlook is better than it has been in the recent past, analysts also expect Novavax to grow faster than the industry as a whole.
The bottom line
Most importantly, with this upgrade, analysts have revised their earnings per share estimates for the next year in anticipation of an improvement in business conditions. Fortunately, analysts have updated their sales estimates too, and our data shows that sales are likely to outperform the broader market. Given that the consensus seems almost universally bullish with a significant increase in forecasts and a higher price target, Novavax may be worth investigating further.
Analysts are definitely optimistic about Novavax, but no company is perfect. In fact, you should know that there are a few potential concerns to be aware of, including significant dilution from new stock issuance over the past year. For more information, you can click on our platform to learn more about this and the other warning signs that we have identified.
Another way to find interesting companies that could hit a tipping point is to keep track of whether management is buying or selling using our free list of Growing Companies That Buy Insiders.
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