Novavax (NVAX) Marked As A Barbarian At The Gate

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Novavax ( NVAX) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Novavax as such a stock due to the following factors:

  • NVAX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $26.0 million.
  • NVAX has traded 1.3 million shares today.
  • NVAX traded in a range 214% of the normal price range with a price range of $0.48.
  • NVAX traded above its daily resistance level (quality: 530 days, meaning that the stock is crossing a resistance level set by the last 530 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on NVAX:

Novavax, Inc., a clinical-stage vaccine company, focuses on discovering, developing, and commercializing recombinant nanoparticle vaccines and adjuvants. The company produces its vaccines using its proprietary recombinant nanoparticle vaccine technology. Currently there are 6 analysts that rate Novavax a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Novavax has been 3.6 million shares per day over the past 30 days. Novavax has a market cap of $2.6 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.26 and a short float of 11.7% with 10.28 days to cover. Shares are up 60.7% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Novavax as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income and weak operating cash flow.

Highlights from the ratings report include:
  • NOVAVAX INC's earnings per share declined by 42.9% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, NOVAVAX INC reported poor results of -$0.36 versus -$0.31 in the prior year. For the next year, the market is expecting a contraction of 19.4% in earnings (-$0.43 versus -$0.36).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Biotechnology industry. The net income has significantly decreased by 76.5% when compared to the same quarter one year ago, falling from -$13.81 million to -$24.37 million.
  • Net operating cash flow has decreased to -$30.49 million or 49.23% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Biotechnology industry and the overall market, NOVAVAX INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for NOVAVAX INC is currently very high, coming in at 88.36%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -246.73% is in-line with the industry average.

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