News Flash: 8 Analysts Think Novavax, Inc. (NASDAQ:NVAX) Earnings Are Under Threat
The analysts covering Novavax, Inc. (NASDAQ:NVAX) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon. At US$10.20, shares are up 5.4% in the past 7 days. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.
Following the downgrade, the consensus from eight analysts covering Novavax is for revenues of US$246m in 2027, implying a substantial 40% decline in sales compared to the last 12 months. The loss per share is expected to ameliorate slightly, reducing to US$0.45. Yet before this consensus update, the analysts had been forecasting revenues of US$282m and losses of US$0.13 per share in 2027. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
View our latest analysis for Novavax
The consensus price target was broadly unchanged at US$14.11, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One more thing stood out to us about these estimates, and it's the idea that Novavax's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 34% to the end of 2027. This tops off a historical decline of 16% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 22% annually. So while a broad number of companies are forecast to grow, unfortunately Novavax is expected to see its sales affected worse than other companies in the industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at Novavax. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected next year, we wouldn't be surprised if investors were a bit wary of Novavax.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Novavax analysts - going out to 2028, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies backed by insiders.
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