As part of our plans to trade off the effects of the new, Omicron, variant it’s necessary to look down into the second-ranking companies that will be affected. Sure, airlines will take a hit from travel restrictions, vaccine manufacturers will benefit from the demand for more and new vaccines. But those are obvious and quickly traded.
The problem with that is that we have to take a view before the thing, whatever it is, has happened. For we’ll have precious little time to trade on news as it comes out. This leads to desiring opportunities that take a little longer to work through into the public – ie market – consciousness.
Just one second-order opportunity is the testing companies. They’re not so obvious, not clear first rank things to think about. Meaning we might find that prices move more slowly after any news.
This gives us Thermo Fisher (NYSE: TMO). They’ve just announced that their current and extant tests do work on this new Omicron variant. It’s possible to take a dim view of this, which is that everyone doesn’t have to go buy new testing packs in order to be able to check for Omicron. But that’s not quite how the testing market does work. Instead, each test requires a pack and those who can successfully test will get the orders for packs.
So, we can assume that this news will be good for sales and so good for the stock.
That being not quite the point though. We are interested in market reactions to things, not to the long-term outcomes of product development. Even, we’re into the knee-jerk responses to news, not to reality whenever it decides to turn up. Announcements of ancillary services which deal with, work with, this new variant are likely to lead to prices movements in the stocks concerned.
There are larger effects here too. Testing for the SARs -2 itself depends upon looking at the protein spike the virus has. This is where mutations take place as well – as is common with viruses, evolutionary selection is going to take place at the point of interaction with the host. A test – or series of them – that only recognized the original spike would thus be useless against variants. This being the real news here from Thermo Fisher. They sample at three different points, meaning that mutation at any one of them doesn’t escape detection.
Another way of putting this is that the tests working upon the one new variant are reasonable proof that the tests will continue to work upon further mutations. We’ve evidence – partial and not complete but still – that the current tests therefore have a long working life, longer than just any one wave of the virus.
That’s a positive impact for the stock we would think. The trading question is whether we think the rest of the market is going to think the same once they’ve had to time to do so.
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