Monkeypox outbreak could boost stocks of these companies


(Bloomberg) — As health authorities around the world look for ways to stop the monkeypox outbreak, investors are snatching shares of companies that could benefit from the race to suppress the disease.

Most read by Bloomberg

Shares of vaccine makers, antiviral drug makers and protective equipment manufacturers are in high demand as investors leverage a strategy that paid off during the coronavirus pandemic. Biotechnology company Bavarian Nordic A/S and pharmaceutical company Siga Technologies Inc. are among the stocks in focus, as well as medical device supplier Precision System Science Co.

Though nowhere as serious as the Covid-19 outbreak, the spread of monkeypox infections in more than 70 countries in just a few months has prompted the World Health Organization to declare it a global emergency. This ruling could give trade an extra boost.

“Right now, the world relies on one manufacturer, Bavarian Nordic, for the monkeypox vaccine,” said Manish Bhargava, fund manager at Straits Investment Holdings Pte in Singapore. “To keep up with demand, we can expect other biotech companies to ramp up their research and production. It is starting to reflect in the strong share price performance for the sector.”

ALSO READ  Robinhood, Carvana and more - these stocks soar after cost-cutting announcement

Here are some sectors and companies that have been active:

Vaccines and Antivirals

Shares of Bavarian Nordic have more than tripled from a low in May after governments began ordering the Danish company’s monkeypox vaccine — the only one specifically approved to ward off the infection. The company has raised its revenue expectations several times this year.

Analysts take note, with Citigroup Inc. raises its target price for the company’s stock by 20% and signals that there may be even more profit if more orders come in.

Shares of other companies that make vaccines or antivirals for monkeypox have also attracted the attention of US retailers. The stock of Siga Technologies, which produces the Tpoxx treatment, has doubled this year. The therapy is approved for the treatment of smallpox in the US, and monkeypox and other viruses in the European Union and the UK.

ALSO READ  Bed Bath & Beyond Up Nearly 40% As Retailers Pile Back In Meme Stocks

Tembexa from Chimerix Inc. is a countermeasure used to treat smallpox, and the company said in May it would sell the drug to Emergent BioSolutions Inc. On the vaccine side, Emergent’s ACAM2000 is a smallpox vaccine that can be used against monkeypox in some cases.

Siga, Chimerix and Emergent are the “main beneficiaries” of the WHO’s statement that the monkeypox outbreak is a global emergency, according to Cowen Inc. analyst Boris Peaker.

“With more resources allocated to tracing and testing contacts in the EU and the US, we expect the number of cases to rise significantly in the coming months, potentially leading to increased procurement of countermeasures,” Peaker wrote in a note.

Japan has also started studying smallpox vaccines as a way to prevent the outbreak from spreading, and this may spark interest in Meiji Holdings Co. as its KM Biologics unit produces a smallpox vaccine. Meiji Holdings is up 12% from its June low.

The Asian nation has a stockpile of smallpox vaccines, but the amount has not been disclosed as preparations for Tpoxx administration progress, Citigroup analyst Hidemaru Yamaguchi wrote in a note.

ALSO READ  Energy stocks have a sustainable future: it's in their dividend

Virus detection

Companies that provide virus testing kits and tools are also in the spotlight.

In Japan, shares of Precision System, which makes medical testing equipment, have nearly doubled since the end of June. Roche said in May it had developed three test kits to help scientists detect monkeypox.

More than 30 companies in China have obtained EU certification for their monkeypox virus detection products, analysts at Jefferies Financial Group Inc., including Christopher Lui, wrote in a July 25 note. These include early movers such as Autobio Diagnostics Co., Shanghai ZJ Bio-Tech Co. and Daan Gene Co. Shanghai ZJ is up nearly 40% in July.

Makers of antigen and antibody test kits such as Zhejiang Orient Gene Biotech Co. and Assure Tech (Hangzhou) Co. are the other potential beneficiaries.

Most read from Bloomberg Businessweek

©2022 Bloomberg LP