Novavax recently announced promising preliminary results from the SHIELD-Utah study, which highlighted fewer and less severe reactogenicity symptoms for its COVID-19 Vaccine, Adjuvanted, compared to Pfizer-BioNTech's offering. Despite this positive development, the company's stock performance last week was largely flat, rising 1%, amid broader market fluctuations driven by U.S. restrictions on chip exports to China. The Dow Jones, S&P 500, and Nasdaq all experienced notable declines, with technology stocks leading the downturn. In this context, the encouraging vaccine news from Novavax likely provided a stabilizing influence against broader market trends.

We've spotted 2 possible red flags for Novavax you should be aware of, and 1 of them is significant.

Find companies with promising cash flow potential yet trading below their fair value.

Over the past year, Novavax's total shareholder return was 60.15%, indicating a significant recovery compared to recent flat performance. Notably, over the same period, it outpaced both the US market and the biotech industry, which returned 5.9% and experienced a 7.2% decline, respectively. This suggests that, despite short-term volatility, longer-term investor sentiment has been favorable.

With regards to Novavax's recent achievements, the preliminary SHIELD-Utah study results could positively influence revenue and earnings forecasts due to increased consumer confidence in its vaccine offerings. However, given Novavax's share price currently trades at a 71.6% discount to its consensus analyst price target of US$16.43, there's a marked gap between market valuation and analyst expectations. This divergence could represent potential upside or reflect uncertainties around future financial performance.

The valuation report we've compiled suggests that Novavax's current price could be quite moderate.

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.

Companies discussed in this article include NasdaqGS:NVAX.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com