Patrick Murphy works as a financial analyst for a large investment fund located in London. He has been tasked with finding a firm within the pharmaceutical industry whose stock would make for a good investment opportunity. After some research he has discovered a firm, Virultech plc, whose share price he believes is going to increase significantly in the near future.

Virultech plc specialises in the development of anti-viral treatments. Two days ago it announced that it is optimistic that it has made a significant breakthrough in the development of a treatment for Covid 19 sufferers. In the 3 days leading up to this announcement the firms share price climbed steadily, but on the day of the announcement there was only a minor increase in the share price, with very little change since then. Patrick believes that now would be an excellent time to purchase shares in Virultech plc given the markets slow reaction to the announcement, and had made a strong buy recommendation to the fund manager.

Required:

In light of your knowledge of the Efficient Market Hypothesis and studies that have been conducted to test the three forms of efficiency as they pertain to the stock market, critically evaluate Patricks investment recommendation. In your answer make reference to any journal article(s) you deem relevant.