Hargreaves Lansdown investors are buying Synairgen shares. Should I buy too?

Synairgen shares have been volatile. But should I buy now? This Fool takes a closer look at the company’s recent announcement.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I’ve been bullish on Synairgen (LSE: SNG) shares for sometime. But the stock has been volatile. So far in 2021 the share price is up only 5% but during the past 12 months it has increased by over 280%. Of course, past performance isn’t an indication of future returns.

Even Hargreaves Lansdown investors have turned positive on Synairgen shares. The company was one of the top 10 most purchased stocks last week on the platform.

The AIM-listed firm recently came out with an announcement, which I thought was very encouraging. I’m still bullish on the stock and would buy it in my portfolio.

The announcement

So, last week, Synairgen released a statement saying that its in vitro studies showed that its treatment is effective against key Covid-19 variants. I’m not surprised the stock jumped on this news.

As a quick reminder, the company developed SNG001, which is a treatment for Covid-19. It’s worth adding here that this is not a vaccine. This is used to treat those who are already infected with the coronavirus. So far, the clinical trials of SNG001 have been successful.

But what does this new announcement mean? Well, it’s certainly positive news for Synairgen shares.

Studies were conducted at labs in the Netherlands, confirming that SNG001 “potently reduced”  the coronavirus to “undetectable levels” in cells that were infected with the “Wuhan-like” strain as well as the UK/Kent and South African variants.

My view

I’ve previously commented that I think Synairgen shares have bags of potential. And I think this announcement demonstrates it.

Clearly the emerging Covid-19 variants are of huge concern. They pose a threat to the global economy returning to any kind of normality. While the current vaccines are proving to be effective, I don’t think this is enough. They may not work against future coronavirus variants. It’s great to see that the data confirms that “SNG001 is a broad-spectrum antiviral product”.

What I like about Synairgen is that SNG001 could play a key role in combating seasonal variants and other respiratory diseases. I also agree with CEO Richard Marsden’s comments that it’s pleasing “to see initiatives being put in place to accelerate and support development of antiviral therapeutics as a backstop for patients who are admitted to hospital”.

It means that the company’s products could be at the forefront of treating Covid-19. In my view, it also places Synairgen on the radar as a potential takeover target by a larger competitor once the pandemic is over. The company will start dosing patients at trial sites in India as part of its SNG001 Phase III study imminently.

Risks

Syanirgen shares come with a lot of risk. I only have to look at the stock price chart to see that investors are in for a volatile ride. I’d only invest what I could afford to lose.

The company hasn’t generated any revenue yet and so it’s loss-making. I expect this to be the case for sometime because Synairgen is still conducting clinical trials for SNG001. There’s no guarantee this will be successful, so investors may need to brace themselves.

But I’m aware of the risks involved with Synairgen shares. I think this announcement is positive news and could push the stock higher.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Nadia Yaqub has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Up 26%, can the BT share price really push higher still?

The BT share price has surged on several catalysts in 2024, but there’s evidence to suggest that the stock could…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

What are the best dividend shares to buy right now?

As shares in B&M European Value Retail have fallen, the dividend yield has reached a 10-year high. Should investors be…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

My favourite FTSE 100 passive income stock that keeps the Christmas coffers full

The holiday season is expensive and can leave many consumers struggling to make ends meet. Here’s how I use a…

Read more »

Investing Articles

The latest growth forecasts suggest the Glencore share price will hit 555p!

Harvey Jones has been disappointed by the performance of the Glencore share price since he bought the commodity stock last…

Read more »

Dividend Shares

A closer look at the 11% dividend yield forecast for Phoenix Group shares

Phoenix Group shares have one of the highest dividend yields in the FTSE 100 index today. Could this be a…

Read more »

Investing Articles

If I’d put £25,000 into the FTSE 350 at the start of 2024, here’s how much I’d have today!

Many FTSE shares have rebounded this year as interest rates look set to keep heading lower and market appetite for…

Read more »

Investing Articles

Up 40%, but experts forecast the easyJet share price could soon hit 664p! Time to buy?

The easyJet share price has been flying lately and stock analysts are predicting more fun to come. But there's only…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

Worried about tax raids? Here’s how I’m targeting a £44,526 passive income with shares

Investing in a Self-Invested Personal Pension (SIPP) or Individual Savings Account (ISA) can supercharge one's passive income, says Royston Wild.

Read more »