What Happened?
Shares of vaccine biotechnology company Novavax (NASDAQ: NVAX) jumped 24.4% in the morning session after the company reported fourth-quarter financial results that significantly beat analyst expectations. Novavax announced revenue of $147.1 million, up approximately 67% from the prior year's quarter and well ahead of forecasts. The company also posted a surprise profit with earnings per share (EPS) of $0.11. This was a significant beat, as analysts had expected a loss of $0.49 per share, and it marked a notable turnaround from a loss of $0.51 per share in the same period of the previous year. The strong top-line growth and unexpected profitability drove investor optimism.
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What Is The Market Telling Us
Novavax’s shares are extremely volatile and have had 53 moves greater than 5% over the last year. But moves this big are rare even for Novavax and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 13 days ago when the stock gained 4.2% on the news that a softer-than-expected inflation report fueled hopes for interest rate cuts by the Federal Reserve. The January Consumer Price Index (CPI), a key measure of inflation, rose by 0.2%, which was less than economists had forecast, with the annual rate cooling to 2.4%. This encouraging data increased market expectations for the Fed to begin cutting interest rates as early as June. The news prompted a rally in Treasuries as their yields fell. While the market's reaction was initially described as a "bumpy ride" due to concerns in other sectors, the favorable inflation data ultimately helped calm Wall Street. Lower inflation is a key prerequisite for the central bank to ease its monetary policy, which is generally supportive of stock valuations.
Novavax is up 56.1% since the beginning of the year, and at $11.14 per share, has set a new 52-week high. Investors who bought $1,000 worth of Novavax’s shares 5 years ago would now be looking at an investment worth $48.14.
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