Healthcare Business

Natural Hedges for Coronavirus Fear Beating Up the Broad Markets

Chris Lange

The broad markets were crushed on Monday on renewed fears of the spread of the coronavirus (Covid-19). All the major U.S. averages were down at least 2.5% to start the week, but a handful of stocks were acting as a natural hedge to the virus news. Most of these companies are involved with the production of a vaccine, and the race to be first could be an incredible win for any of these companies.

As we’ve seen over the past few weeks, China is facing an outbreak of the coronavirus, and this has spread to more countries around the world. Global infections of nearly 80,000 people have been reported, but only about 2,500 of these were outside of mainland China. However, there are concerns that China is underreporting these numbers, and asymptomatic transmission is a troubling issue.

There are currently 52,000 active cases of the coronavirus, and 28,000 closed cases. Of the cases with outcomes, over 25,000 of those infected have recovered while there have been just over 2,600 reported deaths.

The economic concerns of the coronavirus are mounting, and companies with production in China are likely to see the biggest impact. However, global gross domestic product numbers could see a drop as more companies take precautionary measures rather than risk infection. With a more cautious approach to business, it’s easy to see how the global economy would slow down, especially with China acting as one of the biggest manufacturers.

Some quick background: Coronaviruses are a large family of viruses that cause illness ranging from the common cold to pneumonia. It primarily affects the respiratory system. In the past, coronaviruses have manifested as severe acute respiratory syndrome (SARS) and, most recently, Middle East respiratory syndrome (MERS).

The following biotech companies have exposure to experimental vaccines and their shares were seeing the biggest boost from this news. Also as the broad markets pull back, these companies act as a natural hedge for the coronavirus.

Novavax Inc. (NASDAQ: NVAX) shares were up over 8% at $8.38 Monday morning, in a 52-week range of $3.54 to $43.40. The consensus price target is $13.75.

NanoViricides Inc. (NYSE: NNVC) stock traded up 42% at $9.44. The 52-week range is $1.27 to $19.20.

Lakeland Industries Inc. (NASDAQ: LAKE) shares were up 7% at $14.50, in a 52-week range of $9.70 to $16.28. The consensus price target is $16.00.

Inovio Pharmaceuticals Inc. (NASDAQ: INO) shares were up 10% at $4.14. The 52-week range is $1.92 to $5.95, and the consensus price target is $9.43.

Gilead Sciences Inc. (NASDAQ: GILD) shares were up about 5% at $72.94. The 52-week range is $60.89 to $74.51. The consensus price target is $75.04.