Is Novavax (NVAX) a Buy Amid Volatile Earnings and Strategic Partnership Gains?

The question of whether Novavax (NVAX) warrants a place in a near-term investment portfolio hinges on a delicate balance between its volatile earnings performance and the transformative potential of its strategic partnerships. As the biotechnology sector grapples with shifting market dynamics, Novavax's trajectory offers a compelling case study in the interplay between financial uncertainty and innovation-driven growth.

Earnings Volatility: A Double-Edged Sword

Novavax's financial performance has been marked by sharp declines in recent quarters. For Q4 2024, the company reported revenue of $88 million, a stark drop from $291 million in the same period in 2023, primarily due to reduced product sales under its APA agreements. While the firm raised its 2025 adjusted revenue guidance to between $300 million and $350 million, analysts remain skeptical, forecasting annual revenue and earnings declines of -29.2% and -40.9%, respectively, with EPS expected to fall by -42.4% per annum. This pessimism is compounded by the fact that Q3 2025 revenue of $70 million fell short of the $152.5 million forecast set earlier in the year.

Yet, there are glimmers of optimism. The company's Q2 2025 earnings report exceeded expectations, with an EPS of $0.62, and its recent Q3 results included $50 million in milestone payments from Sanofi related to marketing authorization transfers. These developments suggest that while Novavax's core revenue streams remain fragile, its ability to secure milestone-driven income could stabilize its near-term cash flow. However, the absence of Q4 2025 results as of December 2025, with analysts expecting an EPS of -$0.16 for the quarter, underscores the risks of overreliance on partnership milestones.

Strategic Partnerships: A Catalyst for Growth

Novavax's pivot to a partnership-driven model has become a cornerstone of its strategy. The collaboration with Sanofi, in particular, has been transformative. Year-to-date in 2025, the partnership generated $225 million in milestone payments, including $50 million in Q4 2025 for regulatory approvals in the U.S. and EU. Sanofi's assumption of commercial responsibility for Nuvaxovid in key markets has allowed Novavax to focus on R&D, reducing operational costs and freeing capital for innovation.

Beyond Sanofi, Novavax has expanded its reach through Takeda's approval of Nuvaxovid in Japan, triggering additional milestone payments, and through its malaria vaccine, R21/Matrix-M, which has sold 25 million doses since its 2024 launch. The company has also entered material transfer agreements with three pharmaceutical firms to explore the use of its Matrix-M adjuvant technology. These partnerships not only diversify Novavax's revenue streams but also position it as a key player in global vaccine development.

Strategic Shift and Financial Implications

The shift from direct commercialization to a licensing and royalty-based model carries both opportunities and risks. On the one hand, Novavax's 2025 revenue forecast was raised to $1.04–1.06 billion, driven by the strength of its partnerships and cost-saving measures such as facility consolidations. The company aims to achieve profitability by 2027, leveraging its R&D expertise and expanding its collaborative network.

On the other hand, this model introduces significant dependency on the success of its partners. For instance, Sanofi's ability to commercialize Nuvaxovid and develop combination vaccines using Matrix-M will directly influence Novavax's future earnings. As noted by a report from Investing.com, "future revenue is contingent on the regulatory and commercial performance of its partners" according to the report. This introduces volatility, as setbacks in partner programs could delay or reduce milestone payments.

Investment Considerations: Balancing Risks and Rewards

For investors, the key question is whether Novavax's strategic momentum can offset its earnings volatility. The company's recent milestones-such as the $225 million in partnership-driven revenue and the $230 million in projected cost savings from facility consolidations according to the latest financial report-demonstrate its capacity to adapt. However, the reliance on partnership success means that Novavax's stock is likely to remain highly sensitive to external factors, such as regulatory delays or market competition.

Analysts' pessimism is not unfounded. The projected EPS decline of -42.4% annually highlights the challenges of maintaining profitability in a sector where R&D costs are high and commercialization timelines are uncertain. Yet, the potential for significant upside exists. If Sanofi and other partners achieve their regulatory and commercial goals, Novavax could see a surge in royalty income and expanded market share.

Conclusion

Novavax's investment case is a study in contrasts. While its earnings volatility and dependence on partnership milestones pose risks, the company's strategic pivot to a licensing and R&D-focused model offers a path to long-term growth. For investors with a medium-term horizon and a tolerance for uncertainty, Novavax's innovative partnerships and recent financial adjustments may justify a cautious "buy." However, those seeking stable, predictable returns should approach with caution. The coming quarters-particularly the Q4 2025 earnings report and the February 2026 full-year results-will be critical in determining whether this biotech firm can transform its strategic gains into sustained profitability.