Swine Flu Stocks

Over the weekend, the world has been engulfed in fear of the Swine Flu outbreak. It’s hard to say what the impact will be. After Hong Kong experienced the SARS outbreak, their stock market dropped 17%.

Smithfield Foods (SFD), the world’s largest pork producer, is down sharply. Many airline and cruise line stocks are also down.

So who’s working on a treatment? Reuters reports:

“Switzerland’s Roche Holding AG (ROG.VX) and Britain’s GlaxoSmithKline Plc (GSK.L) are the two big pharmaceutical groups set to benefit most as governments and corporations step up orders for their drugs Tamiflu and Relenza.

“Shares in the two companies rose 4 and 3 percent respectively on Monday, while Australia’s Biota Holdings Ltd (BTA.AX), which licensed Relenza to Glaxo, soared 82 percent.

“But analysts cautioned that the commercial impact would be muted by the fact that many governments had already placed substantial stockpile orders because of the previous threat posed by avian flu.

Novavax (NVAX) has been up as much as 150% today and Biocryst (BCRX) is up 90%.

One of my favorite health care stock, Baxter International (BAX), is already working with the World Health Organization on a potential vaccine. The Chicago Tribune reports:

“Baxter confirmed over the weekend that it is working with the World Health Organization on a potential vaccine to curb the deadly swine flu virus that is blamed for scores of deaths in Mexico and has emerged as a threat in the U.S.

“Baxter, which has an emerging vaccine business, has worked with the U.S. and foreign countries in the past to develop vaccines for the H5N1 virus commonly known as bird flu.

“Baxter has a cell-based technology that allows the company to produce vaccines more rapidly in the event of a pandemic than a decades-old method that uses eggs and can take weeks or months longer. Although the egg-based method has produced safe and effective vaccines, analysts say Baxter’s method can cut production times in half compared with the older process.”

Earlier this month, Baxter reported a significant jump in profits that totaled 83 cents a share. Earnings were above the 81 cent forecast, equaling a small earnings surprise. BAX saw weaker sales numbers due to currency rates — but investors focused on the positives and bid share prices up almost 5%. That’s because excluding the impact of the stronger dollar, bioscience sales would have risen 11% for Baxter-a great sign of future growth.

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