Too Much Bad News Can Fuel a Reversal

By most measures, investors have reason to be skeptical about vaccine specialist Novavax (NASDAQ:NVAX). Once heralded as a key player in the race to find a solution for the COVID-19 disaster, Novavax shares collapsed as fears of the virus faded sharply. Since then, the company has struggled for relevance. While very few experts will see the biotechnology firm as a robust investment opportunity, too much bad news could fuel a shocking reversal. Therefore, I am near-term bullish on NVAX stock.

Skepticism Reigns Supreme for NVAX Stock

Before diving into the factors that could spark a rally that few believe possible, it’s important to acknowledge the deep-seated troubles Novavax faces. For example, even with the promise of a new year, NVAX stock fell by a staggering 20% since the beginning of January. And just to reinforce the point, in the past 52 weeks, NVAX had shed about 66% of its equity value.

If stakeholders were hoping for an auspicious start, this wasn’t it. Further, management itself isn’t giving off encouraging signals. As the TipRanks Newsdesk pointed out recently, Novavax announced a strategic plan to reduce its annual spending. That’s the fancy way of saying it will lay off its global workforce. Unfortunately, the job cuts will impact approximately 12% of the firm’s full-time employees and contractors.

Moreover, it wasn’t the first time Novavax resorted to a headcount reduction. In May 2023, management made the decision to cut 25% of its workforce. While the move should theoretically help streamline its financials, the main issue has always been scientific relevancy.

According to The New York Times, Novavax was on the verge of collapse a year before the COVID-19 crisis. “One of its leading vaccine candidates — to prevent a deadly virus in infants — had failed for the second time in three years. The company’s stock was trading so low that it risked being removed from the Nasdaq,” the NYT wrote.

Then, the pandemic gave NVAX stock a second…