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The Wining Sector & Its Top Stocks in Virus-Infected January

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The first month of 2020 was moderate for Wall Street despite a host of negative events globally, starting from the Middle East tension to the coronavirus outbreak. Global growth worries also resurfaced in the month.

Still, Wall Street stayed resilient apart from some occasional dips. The S&P 500, the Dow Jones and the Nasdaq advanced about 1.6%, 1.1% and 3.6%, respectively, in the past one month (as of Jan 30, 2020).

Most of the top-performing stocks of the month were from the biotech sector. Let’s delve a little deeper into the winning sector in the virus-tormented January that showered gains on investors.

Inside the Headline Events in January

The key U.S. indexes’ spectacular 2019 rally faltered to start 2020 as the U.S.-Iran row triggered concerns of a war. While the event kept the market edgy at the start of January, the signing of the mini U.S.-China trade deal offered some support in mid-month only to witness IMF’s downbeat projections about global growth.

To make matters worse, the report of the SARS (severe acute respiratory syndrome)-like coronavirus outbreak hit the market in late January. China’s coronavirus has so far taken about 213 lives in Mainland China and infected 9692 people.

The World Health Organization (WHO) termed the outbreak a global emergency. All these events sparked a safe-haven rally, dragging down benchmark U.S. treasury yields to as low as 1.57% on Jan 30.

Biotech Rallies

The coronavirus event did have a reason to give a boost to the biotech space. After all, healthcare and biotech stocks should do well on the growing need for the formulation of vaccines to fight the virus and higher demand for hygiene-related products.

Apart from coronavirus, the general trend of the sector also aided the space as the biotech area has been thriving with positive drug data, FDA approval and plenty of mergers and acquisitions. So far this year, FDA has approved three drugs compared with no approval in Jan 2019, and one approval each in Jan 2018, Jan 2017 and Jan 2016.

Below we highlight a few biotech stocks that were clear winners in the past four weeks (as of Jan 30, 2020).

Trillium Therapeutics Inc. TRIL – Up 330.1%

The company is a clinical stage immuno-oncology company developing innovative therapies for the treatment of cancer.The stock belongs to a favorable Zacks industry — Medical - Drugs — (placed at the top 44% of 250+ industries).

Miragen Therapeutics Inc. MGEN – Up 252.2%

Miragen Therapeutics, Inc. is a biopharmaceutical company. It develops microRNA biology, oligonucleotide chemistry, drugs and therapies for cancer, pathologic fibrosis, neuro-inflammatory and cardiovascular diseases. The company came up with positive drug data for Cobomarsen in Adult T-Cell Leukemia on Jan 30, which led the stock to rise by 20.7% on the day. The stock belongs to a favorable Zacks industry — biomedical and genetics — (top 29%).

Co-Diagnostics Inc. CODX – Up 222.8%

Co-Diagnostics Inc. is a molecular diagnostics company. The company is a clear beneficiary of the virus threat as it finalized its own unique Coronavirus detection test. The new screening can test several patients at a time. The stock hails from the favorable Zacks industry (top 29%).

Pulmatrix Inc. PULM – Up 111.6%

It is a biopharmaceutical company which is engaged in developing inhaled therapies for serious pulmonary disease. The company joined forces with Johnson & Johnson JNJ for their Lung Cancer Initiative at the start of the month.

At month end, the company’s PUR1900 ("Pulmazole") received the fast track designation from the FDA. The proprietary product is an inhaled itraconazole antifungal candidate being developed to treat allergic bronchopulmonary aspergillosis (ABPA) in patients with asthma.

Vaxart Inc. VXRT – Up 105.7%

Vaxart, Inc. is a clinical-stage company developing a range of oral recombinant vaccines based on its proprietary delivery platform. Its development programs are oral tablet vaccines designed to protect against norovirus, seasonal influenza and respiratory syncytial virus, as well as a therapeutic vaccine for human papillomavirus.

Due to its development profile, the coronavirus case made the stock a winner. This is especially true given the fact that VXRT stock was heavily shorted in recent times. So, the latest virus threat worked wonders for Vaxart. The stock comes from a favorable Zacks industry (top 44%).

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Johnson & Johnson (JNJ) : Free Stock Analysis Report
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