Citi Starts Novavax at Sell, Citing Strategic Shift and Limited Upside

Citi initiated coverage on Novavax (NASDAQ:NVAX) with a Sell rating and a $6 price target, flagging concerns over the company’s evolving business model and high-risk profile despite its established vaccine technology.

Once singularly focused on its COVID-19 vaccine—which peaked at $2 billion in revenue following its 2022 launch—Novavax has recently pivoted its strategy. The biotech firm has now introduced a second commercial product: a malaria vaccine based on its proprietary nanoparticle and Matrix-M adjuvant technology. This vaccine, designed for endemic regions in low-income countries, began distribution in May 2024.

While the company's platform has demonstrated scientific validity, Citi sees limited near-term commercial upside. Novavax’s new direction includes a licensing partnership with Sanofi, granting the pharma giant rights to its COVID vaccine and future combination products like a COVID+flu shot, as well as potential development of additional vaccines.

Despite the Sanofi deal offering some longer-term optionality, Citi remains cautious. The firm believes the new strategy introduces more risk than reward at this stage, with limited catalysts to drive meaningful near-term gains.