Worries over how the coronavirus outbreak will impact corporate profit margins and global economy roiled the U.S. stock market in February. And it’s almost certain that the outbreak will continue to dominate the headlines in March as well. As such, investors should certainly brace for more gyrations in the days ahead.
But even though most of the major indexes have registered double-digit losses in the past few weeks, certain biotech stocks have defied the downward trend and ended in the green during such turbulent times. And it’s mostly because these companies are trying to develop a treatment for coronavirus, which helped garner impressive gains over the last couple of weeks. And should these clinical tests prove successful, such stocks will surely scale north in the long run. At the same time, professional money managers are looking to buy stocks that act as a hedge against the virus threat, or those that simply benefit from the particular event.
Notably, such stocks include
Moderna, Inc. ( MRNA Quick Quote MRNA - Free Report) , Inovio Pharmaceuticals, Inc. INO and Co-Diagnostics, Inc. CODX. Clinical stage biotechnology company, Moderna has manufactured a new vaccine for coronavirus treatment. Unlike DNA-based treatments, Moderna focuses on developing mRNA treatments, which should help in treating the virus better. DNA-based treatments generally require the nucleus of the cell but mRNA can be found across the cell which makes it easily accessible.
Moderna, by the way, has been pretty impressive. After getting to know the virus’ genetic composition, it just took the company less than two months to develop the vaccine. Moderna currently flaunts a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current-year earnings has moved up 6.2% over the past 60 days. What’s more, the company’s expected earnings growth rate for the current and next quarter is 7.5% and 9.8%, respectively. You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Similarly, Inovio Pharmaceuticals grabbed the headlines in February when the company announced that it has successfully developed a novel vaccine known as INO-4800 to protect people from coronavirus. Inovio Pharmaceuticals expects to use the vaccine on humans starting this summer. On the heels of such encouraging news, Inovio Pharmaceuticals’ shares have jumped nearly 30% so far this year. To top it, the Zacks Rank #2 company’s expected earnings growth rate for the current and next quarter is 32.4% and 23.3%, respectively.
Molecular diagnostics company Co-Diagnostics has introduced an easier-to-use molecular diagnostic test known as the Logix Smart Coronavirus COVID-19 test. And the company has received a CE mark approval from the European Union to make this test commercially available.
With the outbreak of the coronavirus showing no signs of slowing, the need for the molecular diagnostic test will increase, and in turn, Co-Diagnostics’ revenues will grow. Co-Diagnostics has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 66.7% over the past 60 days. The company’s expected earnings growth rate for the next quarter is 44.4%.
Meanwhile, it’s worth pointing out that cash-rich companies can also ride out the coronavirus crisis. After all, such companies are healthy enough to repurchase their own stocks and in the process reward shareholders handsomely. As many know,
Apple Inc. AAPL warned its investors of the impact of the outbreak on its business. Notably, the iPhone maker has been affected more than previously anticipated as the number of iPhones it can manufacture and sell in China will be limited.
But let’s admit, Apple is doing just fine. Traditionally, February isn’t a big month for iPhone sales. And since iPhone is a big-ticket purchase, any drop in sales in February gets compensated in March and April. Moreover, iPhone launches are usually scheduled for the end of a year. And by 2020-end, the outbreak should be a thing of the past.
Nonetheless, Apple has witnessed increased sales of smartwatches, AirPods wireless earbuds and services like mobile payments and streaming-music subscriptions in recent times. Growth in such segments helped Apple offset an almost 14% decline in its iPhone business last year which accounts for the bulk of its sales.
Further, Apple boasts $207 billion of cash and long-term investments. The company can thus create huge wealth for shareholders through share buybacks. By the way, repurchases boost earnings per share, leading to a rally in the stock.
Apple has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved 4.2% north over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 11.8% and 14.8%, respectively (read more:
Coronavirus Fears Holding You Back? 3 Smart Ways to Invest).
We are reissuing this article to correct a mistake. The original article, issued on March 02, 2020, should no longer be relied upon.)