Novavax, Inc. (NASDAQ:NVAX) missed earnings with its latest annual results, disappointing overly-optimistic forecasters. It was a pretty negative result overall, with revenues of US$984m missing analyst predictions by 3.0%. Worse, the business reported a statutory loss of US$5.41 per share, much larger than the analysts had forecast prior to the result. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Novavax after the latest results.
Following the recent earnings report, the consensus from five analysts covering Novavax is for revenues of US$777.9m in 2024. This implies a substantial 21% decline in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 90% to US$0.40. Before this latest report, the consensus had been expecting revenues of US$853.9m and US$0.48 per share in losses. While the revenue estimates fell, sentiment seems to have improved, with the analysts making a notable improvement in losses per share in particular.
The consensus price target rose 13% to US$22.00, with the analysts increasingly optimistic about shrinking losses, despite the expected decline in revenue. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Novavax, with the most bullish analyst valuing it at US$38.00 and the most bearish at US$4.00 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 21% by the end of 2024. This indicates a significant reduction from annual growth of 47% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 18% per year. It's pretty clear that Novavax's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. With that said, earnings are more important to the long-term value of the business. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Novavax going out to 2026, and you can see them free on our platform here.
Even so, be aware that Novavax is showing 5 warning signs in our investment analysis , and 2 of those are concerning...
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