Biotech stocks linked to the coronavirus healthcare response have surged in defiance of the market. The question for investors open to a short-term strategy now becomes, will future gains continue? (The Motley Fool)
A handful of biotech companies have been stock-market winners even as the coronavirus outbreak has pushed the market as a whole into bearish territory. The S&P 500 is down 25% since the start of the year, while Moderna (NASDAQ:MRNA) has gained 47%, Regeneron Pharmaceuticals (NASDAQ:REGN) rose by 34%, Gilead Sciences (NASDAQ:GILD) climbed by 24%, and Inovio Pharmaceuticals (NASDAQ:INO) soared by 96%.
There is no secret to these companies’ short-term performance. Each one is working on a treatment or vaccine for coronavirus, the pandemic that so far has resulted in more than 207,000 cases of COVID-19 worldwide. Now investors are wondering: Considering the gains, is it too late to buy shares of these companies?
With countries including France and Italy on lockdown, and coronavirus cases increasing in the U.S. and elsewhere, the outbreak isn’t over. As long as it continues and biotech companies make progress on their treatment or prevention programs, upside is possible. But that remains a short-term investment strategy.
Investors should consider revenue gains from new treatments limited by the nature of pandemics and the moral questions that inevitably arise from vaccine pricing.
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