Recently, Novavax (NASDAQ:NVAX) fell fast. Closing at $207.31 per share on Sept. 30, the vaccine play opened at around $190 on Oct. 1. After that, NVAX stock quickly went into free fall, dropping as low as $154 per share.

The reason? Breaking news of Merck’s (NYSE:MRK) antiviral Covid-19 pill. Interim results suggest it could do wonders to cut the risk of Covid-induced hospitalization or death.

Before, I believed that the skepticism some folks had about Novavax was overblown. For example, consider the bearishness about its prospects in the U.S. market. I agree the company’s stateside success is questionable; chances are it won’t have much of a market to sell into as more people get vaccinated. But once approved, the company still could profit in the States thanks to demand for booster shots. Plus, overseas success could alone drive the stock higher.

However, now with Merck’s potential game-changer, is NVAX stock through? In my opinion, it may not be “game over” for Novavax just yet. But the bull case has definitely changed.

What Recent News Means for NVAX Stock

Given the scores of orders Novavax has locked down internationally, the vaccine maker could still generate $5.5 billion in sales in 2022 and post earnings per share (EPS) of $32.30. Because of that, Novavax is cheap after investors have oversold it, right?

Maybe, maybe not. As fellow InvestorPlace contributor Faisal Humayun recently wrote, Novavax could make inroads in developing economies. But if the need for vaccination goes down in those markets thanks to the availability of this new treatment, earnings could come in at the low end of projections ($12.62 per share).

Sure, that may still make NVAX stock look reasonably priced. At current prices (around $178 per share), it trades for a forward price-to-earnings (P/E) ratio of about 14 times. However, there’s a second concern mounting from news of the Merck pill; basically, it could severely cuts the sales runway for vaccine makers across the board.

That is, their respective windfalls this year and next could come to a halt in 2023 and beyond. A potentially shortened runway for vaccine sales has already been on investors’ minds as the call for booster shots has cooled. So, it makes sense why investors are further discounting NVAX stock.

Nevertheless, while the bull case I’ve previously argued may no longer apply, there is still an opportunity here.

Knocked Down, But Not Out

No doubt, further upside is now much more murky for NVAX stock. With the Merck news — plus headlines about how the pandemic could be over by 2022 — even if results come in line with estimates, investors are not going to assign a high multiple for what would most likely be a one-time windfall.

However, although $500 per share may be off the table, that’s not to say it’s the beginning of the end for Novavax. For instance, the booster shot catalyst might not be out of the running.

As Louis Navellier recently wrote, the company’s innovative combination flu-Covid vaccine could be a success. On top of this, it has a robust pipeline of other candidates. This includes NanoFlu, which has long been seen as a candidate with billion-dollar potential.

Shares may have room to fall, as investors sour more on the news. Once this happens, though, it may be worth giving NVAX another look.

The Story Has Changed for NVAX Stock

With more signaling that this health crisis is approaching a resolution, investors may have gotten ahead of themselves with their bullishness for vaccine plays. However, if the market continues to bid down Novavax in light of recent news, the selloff could become overdone.

Once it falls further, it may be worth giving NVAX stock a second look. For now, though, investors are probably best off to waiting for the dust to settle.

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

Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.