The recent avian flu outbreak has affected over 48 million birds worldwide, according to the U.S. Department of Agriculture, with roughly 35 million of those being egg-laying hens. The viral infection has created a severe drop in egg / poultry production, in turn causing consumers and businesses to see price hikes.

The bird flu has had an impact on governing bodies, corporations and consumers around the globe. American export levels have decreased, and quarantine zones and trade restrictions have been placed on farms and regions where the virus has been found.

According to time.com, it’s likely that the U.S. government will spend more than $500 million to battle the bird flu and compensate farmers for their losses. At the consumer level, Americans will incrementally spend roughly $8 billion on eggs this year, representing a 75% increase over last year. These higher costs should be viewed in the context of decreasing consumption — with year-over-year consumption projections dropping 5% to 250 eggs per person this year, down from 263 last year.

Impact from an Investment Perspective

A series of questions arise when viewing the bird flu from an investment perspective. Is the infection having as large of an impact on the agricultural sector as it may sound? What specific companies are discussing the impact, be it positive or negative, that the bird flu is having on their business? Using AlphaSense, we can answer these questions.

Here are some examples of companies across several industries that are talking about the bird flu as it relates to their business:

Food

  • Treehouse Foods Inc ($THS) arrow-red (potential downside)
    “Egg prices and availability issues related to the avian flu have altered out forward outlook for our dressings category, which makes up over 13% of our total company sales.” (8K, August 06, 2015).
  • J&J Snack Foods Corp ($JJSF) arrow-red
    “Because of the Avian Flu epidemic, our costs of eggs and egg byproducts were higher by about $900,000 in June 2015 than in April 2015.” (10Q, July 27, 2015).

Environmental & Facilities Services

  • Clean Harbors Inc ($CLH) arrow-green (potential upside)
    “It was quite an achievement that once again showed the power of Clean Harbors to effectively respond to multiple large-scale events… While the avian flu was the largest single contributor in the quarter, in aggregate, these events totaled $170 million in revenue for the company.” (TR/E, August 5, 2015).

Biotech

  • Novavax Inc ($NVAX) arrow-green
    “Novavax Avian Flu Vaccine: More Immunogenic Than Any Similar Vaccines Published to Date.” (IR, August 10, 2015).
  • NanoViricides Inc ($NNVC) arrow-green
    “The company is developing drugs against a number of viral diseases including… H5N1 bird flu.” (PR, August 10, 2015).

Commodity Fund

  • Nuveen Diversified Commodity Fund arrow-red
    “U.S. poultry export restrictions enacted because of the avian flu led to an increase in domestic chicken and turkey supplies, creating price competition for beef and pork heading into the summer months.”
    “Concerns about the avian flu epidemic pressured cattle and lean hogs prices during the quarter.” (0001345801, 10K, August 7, 2015).

Sources:
The Desmoines Register
Time.com / Money
USDA.gov