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"...The bottom case
Many investors see one big reason Sinovac may be looking nowhere but up today -- and it's called swine flu. While multinational companies like Novartis (NYSE: NVS), sanofi-aventis (NYSE: SNY), and GlaxoSmithKline (NYSE: GSK) have been racing to develop a vaccine for the swine flu, which was declared a pandemic in June, China-based Sinovac is one of several producers approved in China. Its other vaccines, including its hepatitis A vaccine Healive, have helped Sinovac generate stronger revenue and profits lately, but much of what has investors attention these days is the battle to ward off H1N1 in the world's most populous nation. As the country aggressively stockpiles the vaccine to contain the spread of the virus, the Chinese government recently placed a second order for 3 million more doses of the vaccine, and it could be back for more because it plans to vaccinate 5% of its population, or about 65 million people, by the end of the year.
Or a dead cat in disguise?
But even though Sinovac is well positioned to make tidy profits from this version of the flu, its treatment for the H1N1 strain may not sustain performance for very long. The company expects to generate significant revenues from the vaccine, but it's expected to be only a short-term boost lasting through the end of the flu season in 2010. And like other swine flu-related stocks such as Novavax (Nasdaq: NVAX) and BioCryst Pharmaceuticals (Nasdaq: BCRX), Sinovac's shares have already clocked huge gains so far this year. The stock has soared to more than eight times in value since its dip onto the dollar menu late last year. Some investors and analysts share concerns that if the virus is contained, shares in stocks such as Sinovac could pose a risk to investors as governments stop calling for more orders and valuations come back to earth...."
Many investors see one big reason Sinovac may be looking nowhere but up today -- and it's called swine flu. While multinational companies like Novartis (NYSE: NVS), sanofi-aventis (NYSE: SNY), and GlaxoSmithKline (NYSE: GSK) have been racing to develop a vaccine for the swine flu, which was declared a pandemic in June, China-based Sinovac is one of several producers approved in China. Its other vaccines, including its hepatitis A vaccine Healive, have helped Sinovac generate stronger revenue and profits lately, but much of what has investors attention these days is the battle to ward off H1N1 in the world's most populous nation. As the country aggressively stockpiles the vaccine to contain the spread of the virus, the Chinese government recently placed a second order for 3 million more doses of the vaccine, and it could be back for more because it plans to vaccinate 5% of its population, or about 65 million people, by the end of the year.
Or a dead cat in disguise?
But even though Sinovac is well positioned to make tidy profits from this version of the flu, its treatment for the H1N1 strain may not sustain performance for very long. The company expects to generate significant revenues from the vaccine, but it's expected to be only a short-term boost lasting through the end of the flu season in 2010. And like other swine flu-related stocks such as Novavax (Nasdaq: NVAX) and BioCryst Pharmaceuticals (Nasdaq: BCRX), Sinovac's shares have already clocked huge gains so far this year. The stock has soared to more than eight times in value since its dip onto the dollar menu late last year. Some investors and analysts share concerns that if the virus is contained, shares in stocks such as Sinovac could pose a risk to investors as governments stop calling for more orders and valuations come back to earth...."
