Ebola is a dreaded virus, and there is certainly an urgency to find a vaccine and a cure. However, investors need to be careful that they do not end up in tears from buying Ebola-related stocks without fully understanding the fundamentals.There is simply too much puffery in the mainstream media to lead unsuspecting investors astray.
The latest example is an article that appeared in the Daily Mail after the market close Wednesday hyping Tekmira Pharmaceuticals Corp TKMR, -4.25% with a tantalizing title “Merger mania in healthcare sector keeps dealers on toes during peak holiday weeks with Tekmira now high on takeover tonic.”The stock took off in the aftermarket as the message boards put their faith in the piece.
The article starts out comparing Tekmira with InterMune ITMN, +0.18% and based on this comparison, concludes that Tekmira is worth about $40, more than twice the price of Tekmira stock before the article appeared.
Comparing Tekmira to InterMune is like comparing a kid’s tricycle to a Ferrari.
First take a look at the annotated chart of Tekmira.
The Daily Mail article omits the bad news for Tekmira — that U.S. scientists will start a trial of Ebola vaccine from Glaxo GSK, +0.31% as early as next week. The news is bad for Tekmira, in that Tekmira does not have a vaccine, but a potential drug in very early stages of development. If a vaccine is successful, there will obviously be less need for an Ebola drug…Read more at MarketWatch