Novavax (NVAX) shares plummeted 5.75% in pre-market trading on Tuesday, following Citigroup's initiation of coverage with a "sell/high risk" rating and a $6 price target. The bearish stance from the prominent Wall Street firm has put significant pressure on the vaccine maker's stock.

Citigroup's analysis points to several challenges facing Novavax. The brokerage firm highlighted that Novavax is overly focused on respiratory vaccines, a market that is experiencing declining vaccination rates. Moreover, the COVID-19 vaccine market, which has been a key driver for vaccine manufacturers, is shrinking yearly with an estimated 10% overall decline and a 12% decline in the under-65 segment.

Adding to Novavax's woes, Citigroup also flagged increased competition in the respiratory vaccine space from established players such as Pfizer, Moderna, and GSK. The brokerage raised concerns about Novavax's COVID-19 vaccine, Nuvaxovid, which faces more restrictions from the FDA compared to its competitors. Unlike Pfizer and Moderna vaccines, Nuvaxovid is only approved for adults 65 and older, and high-risk individuals aged 12-64, potentially limiting its market reach.

While not directly related to Novavax, the pharmaceutical sector as a whole may face additional headwinds. U.S. President Donald Trump's recent comments about implementing pharmaceutical tariffs "very soon" could potentially impact the industry. Although the full implications of such tariffs are yet to be seen, they add another layer of uncertainty to an already challenging market environment for vaccine manufacturers like Novavax.