Vaxart (NASDAQ:VXRT), like most COVID-19 stocks, is receiving a re-injection of investor confidence as the virus rages on. However, Vaxart is fairly new to the COVID-19 race, as they have not started any human trials yet. Some investors are straying away from Vaxart because of their late arrival and unlikelihood of creating a viable vaccine before other frontrunners. However, opportunists see the spike in COVID-19 cases and a possible Phase 1 trial announcement as a sign to invest. Thus, today we will breakdown the potential behind Vaxart and whether the bears or bulls have the upper hand.
Table of contents 1. Why is Vaxart surging today? 2. Vaxart in the bigger COVID-19 picture 3. Does YIG see potential in a Vaxart Investment?
Why is VXRT up 60% in two days?
Vaxart is up for three reasons: government confidence, a raging virus, early signs of progress.
First, the Trump administration, through Operation Warp Speed, is placing a considerable amount of funding behind Vaxart’s vaccine. Some investors might every vaccine company and his dog is getting funding right now. While many companies received funding, the government is being more selective. The design of Operation Warp Speed is to back the most promising vaccines and treatments to date. Thus, the US government must like Vaxart’s pre-liminary animal data to include them in the operation. Government confidence is a big green light for investors. Because clinical data should come sooner and the exposure of Vaxart should lead to manufacturing deals in the hope of an optimistic future.
Second, the resurgence of COVID-19 cases and deaths is causing investors to gravitate towards vaccine stocks. Because vaccine companies tend to have the remote control over the market as the virus intensifies.
Possible vaccine data
Third, and probably most importantly, is the potential for promising animal data. Vaxart is testing their vaccine on animals in a controlled setting at the moment. “If the vaccinated animals don’t test positive for COVID-19 after their intentional exposure, it will be the strongest validation of any COVID-19 vaccine produced by any company or group to date”. Considering, the April data from the animal study was pleasing to say investors are optimistic about the August animal data would be an understatement. Also, if the animals do show immunity the government would like fast-track their vaccine through the clinical timeline.
The big picture
The COVID-19 virus has had arguably the greatest impact on our way of life in the 21st Century. This has almost stemmed hand in hand with a change in direction of investor sentiment. Investor sentiment has swung towards the Bio-Pharma industry to capture the monetary gains of what would be the most utilised vaccine for at least the next decade. This will likely be the greatest and most anticipated global race since the infamous race to the moon in the 60s.
As mentioned previously, Vaxart alongside other candidates such as giants Johnson & Johnson and Moderna were selected by the U.S Government’s Operation Warp Speed. This operation aims to fast track the progress of these vaccines by facilitating the development, manufacturing and distribution of each vaccine. With U.S Government funding, this puts Vaxart in the “elite” handful of vaccine companies that will fight it out for first place.
The reality with fast tracked vaccines is that there really is no certainty. But as this race continues to narrow, investors can now make more calculated investments on likely candidates. Here are the some of the strong contenders that pose a threat to Vaxart in the COVID-19 vaccine race.
- Moderna (NASDAQ:MRNA) currently awaiting Phase 3 trial
- AstraZeneca (LON:AZN) moved to Phase 3 trial and has had arguably the strongest momentum shift so far
- Inovio Pharmaceuticals (NASDAQ:INO) currently at phase 2
- Novavax (NASDAQ:NVAX) strong U.S Government funding
Does YIG see potential in a Vaxart Investment?
Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.
Short answer: Investing in the short term holds the most potential. However, you must understand the risks of speculative investments first. (short answer)
Investing on the news
Fundamental analysis is almost non-existent at the moment. The absence of fundamentals means the Vaxart rise is pure speculation. Now, in a normal bullish market is seems to ludicrous to invest in hype. Because, in a bull market, companies with strong fundamentals should provide a nice gain. However, we are not in a normal market. So, investing in the news, and not being greedy, can be a smart investment.
In the case of Vaxart, the news is that they hold a potential cure and have government backing through OWS. The Vaxart news is here to stay unless the virus subsides, or another company develops a viable vaccine. Thus, investing with the intention to ride the hype is a smart idea. Because buyers should continue to invest in Vaxart on the possible future, whether it’s true or not. Hence, why is up 60% in the past day. However, YIG stresses that you set a modest profit target. Because if you invest and let the hype impact your objectivity you will likely never pull out.
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The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Written by Patrick Mcloughlin, and Tyger Fitzpatrick, Senior Manager, and Founder of YIG.