Novavax (NASDAQ:NVAX) stock has been an under-performer among stocks that have been in the Covid-19 vaccine race. After touching highs of $331.7 in February 2021, NVAX stock has plunged to its current price levels of $90.

Of course, there have been fundamental factors that have served as catalysts for the downside. However, it seems that the stock is poised for reversal from current price levels.

Let’s first talk about the reasons for NVAX stock struggling in in the last few quarters.

First and foremost, it needs to be acknowledged that Novavax has not been among the front-runners in the Covid-19 vaccine race. Developed countries have already seen a significant percentage of their population vaccinated. This limits the growth potential for Novavax vaccine in the United States or Europe.

Furthermore, Moderna’s (NASDAQ:MRNA) chief executive officer recently opined that the pandemic could move into an endemic phase in 2022. This also impacted sentiments for vaccine makers. The European Medicines Agency also warned recently that frequent booster doses might have an unintended consequence of weakening the immune system. If this observation holds true, there is a case for limiting the long-term cash flow potential from booster doses.

These factors have negatively impacted NVAX stock. However, I believe that the company still has the potential to boost revenue and cash flows in 2022 and 2023.

Novavax is Focused on Low-Income Countries

One bullish catalyst for Novavax is the focus in low-income countries. It’s worth noting that most of the countries in the African continent still have Covid-19 vaccination rates below 10%. Even in an endemic scenario, it would be critical to vaccinate a majority of the population to be vaccinated to avoid further mutations.

Novavax has already received emergency use authorization (EUA) in Indonesia where the vaccination rate is 42.3%. More recently, the company received EUA approval from India where the vaccination rate is 45.3%.

Novavax has also applied for EUA in South Africa, the Philippines, among various other countries. The key point here is that the company is not targeting developed markets. Instead, the focus is on low-income countries where there is revenue upside potential.

The company already has advanced purchase agreements with several, mostly European, countries for over 400 million doses. Novavax has also committed 110 million doses to the U.S. government. With more EUAs, the company is likely to witness revenue and cash flow upside in the next few quarters.

Novavax Has the Capacity and a Long-term Plan

From a manufacturing perspective, the company already has a capacity of 150 million doses per month. Novavax also has licensing agreements in India, South Korea and Japan. This boosts their overall manufacturing capability.

It’s worth noting that Novavax is also working on combination vaccine development. Currently, clinical trials are underway for a Covid-19 and NanoFlu (the company’s proprietary seasonal flu vaccine) combo vaccine. Data is expected from trials in the first half of 2022. If the results are positive, the vaccine can potentially serve as an annual booster dose. This will provide another window for recurring revenue.

From a long-term perspective, Novavax is building a strong pipeline of vaccines. Clinical trials are ongoing for Covid-19, seasonal influenza and combination vaccines. The company has also initiated trials for a combination of NanoFlu and respiratory syncytial virus (RSV) vaccine.

Concluding Views on NVAX Stock

As of the third quarter 2021, Novavax reported cash and equivalents of $1.9 billion. The company is well capitalized ahead of the commercial launch of its Covid-19 vaccine.

For Novavax, 2021 was a year of clinical trials and submissions for more EUAs. 2022 will be a year of order processing and gradual revenue growth.

It goes without saying that Pfizer (NYSE:PFE) and Moderna will remain the leaders in the vaccine race. However, there is still a significant addressable market for Novavax in low-income countries. This is likely to boost NVAX stock’s valuations.

Additionally, as cash flows increase, Novavax will be positioned to expand its long-term product pipeline. I therefore see the correction as a good opportunity for accumulating NVAX stock.

On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modelling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.