We recently started a series called “Penny Stock of the Day”. These ideas are geared for traders with an extremely high risk appetite.
Our Penny Stock of the Day is chosen by screening for stocks under $5 and then applying technical analysis on the shortlisted set of penny stocks showing unusual volume. When making these trades, please make sure to pay vigilant attention to pricing moves and have a strict stop loss in place to avoid significant losses.
Penny Stock of the Day: Sio Gene Therapies Inc. (NASDAQ: SIOX)
Today’s penny stock pick is the clinical-stage pharmaceutical company, Sio Gene Therapies Inc. (NASDAQ: SIOX).
Sio Gene Therapies Inc. focuses on developing gene therapies to radically transform the lives of patients with neurodegenerative diseases. The company develops AXO-Lenti-PD, in vivo lentiviral gene therapy, which is in Phase II clinical trials for the treatment of Parkinson’s disease; AXO-AAV-GM1, an investigational gene therapy, which is in Phase I/II clinical trials for the treatment of GM1 gangliosidosis; and AXO-AAV-GM2, an investigational gene therapy, which is in Phase I/II clinical trials for the treatment of GM2 gangliosidosis.
It has a license agreement with Oxford BioMedica (UK) Ltd. to develop and commercialize AXO-Lenti-PD and related gene therapy products; and The University of Massachusetts Medical School to develop and commercialize gene therapy product candidates, including AXO-AAV-GM1 and AXO-AAV-GM.
Website: https://siogtx.com
Latest 10-k report: https://sec.report/Document/0001636050-21-000059/
Analyst Consensus: As per TipRanks analytics, SIOX’s average price target is $8.33 based on 4 Wall Street analysts offering 12 month price targets in the last 3 months.
Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company announcing positive Interim Safety and Biomarker Data from Ongoing Phase 1/2 Clinical Study of AXO-AAV-GM1 Gene Therapy in GM1 Gangliosidosis.
- The news of granting of FDA Fast Track Designation for Investigational AXO-AAV-GM1 (AAV9-GLB1) Gene Therapy in Patients with GM1 Gangliosidosis.
- HC Wainwright & Co. reiterated coverage on Sio Gene Therapies with a new price target of $10.
Recent Analyst Ratings | Source: TipRanks.com
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock has currently broken out of a Symmetrical Triangle pattern. A symmetrical triangle is a continuation pattern and is characterized by two converging trendlines connecting a series of sequential peaks and troughs. This is marked on the daily chart as orange color lines. Once a stock breaks out from a symmetrical triangle pattern, it usually moves higher.
SIOX – Daily Chart
#2 Bullish RSI: The RSI is above 50 and moving higher, indicating the strength of the current upmove.
#3 Price above MA: The stock is currently above the 50-day SMA, demonstrating that the bulls are currently gaining control.
#4 MACD above Signal Line: In the daily chart, the MACD (light blue color) has currently crossed above the MACD signal line (orange color). This indicates a possible bullish setup.
#5 Bullish Stoch: The %K line of the stochastic is above the %D line, showing bullishness.
#6 Above Support Area: The weekly chart shows that the stock had bounced back higher after taking support at a long-term support level. This is marked as a pink color dotted line. This is a possible bullish sign.
SIOX – Weekly Chart
#7 Bullish ADX and DI: In the weekly chart, the +DI line is above the -DI line, and the ADX line is currently moving higher from below the +DI and -DI lines. All these are possible bullish indications.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for SIOX is above the price of $2.65.
Target Prices: Our target prices are $3.50 and $5.00.
Stop Loss: To limit risk, place a stop loss below $2.10. Note that the stop loss is on a closing basis.
Our target potential upside is 32% to 89%.
For a risk of $0.55, our first target reward is $0.85, and the second target reward is $2.35. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers 2x to 4x more potential upside than downside.
Potential Risks / Red Flags:
- The company has been a loss-making company. For the years ended March 31, 2021, and March 31, 2020, SIOX had incurred net losses of $32.4 million and $72.6 million, respectively.
SIOX – Consolidated Statements of Operations
- The company was formerly known as Axovant Gene Therapies Ltd. and changed its name to Sio Gene Therapies, Inc. in November 2020.
- Despite reporting increasing losses yea rover year, the company executives are being paid significant compensation.
SIOX – Executive Compensation
- The company would require to raise funding to support its operations through proceeds from offerings of its equity securities or debt, transactions involving product development, technology licensing or collaboration arrangements, or other sources of capital. This could result in dilution.
- The company uses Adeno-associated virus (AAV) vectors. The AAV tech is rumored to have hit some snags.
- SIOX has not generated any revenue yet and is not expected to generate revenue unless and until it successfully completes development and obtains regulatory approval for one of its product candidates.
As you can see, today’s featured penny stock offers big upside potential… but it also comes with a number of risks and red flags. As always, when dealing with penny stocks, we advise caution before entering into such high-risk ventures. Remember to think before you trade… understand the risks… and if you decide to trade, stick to your stop-losses!
Happy Trading!
— Trades of the Day Research Team
READ BEFORE TRADING PENNY STOCKS: The allure of penny stocks lies in their potential to deliver massive gains in a short period of time. However, in exchange for that opportunity, most penny stocks carry tremendous risk. They can be extremely volatile and are susceptible to “pump and dump” schemes and fraud.
Unlike regular stocks, the financial condition of most penny stock companies can be extremely difficult to analyze, as the majority of such stocks are traded on over-the-counter (OTC) exchanges, which are typically less transparent and less regulated than the major exchanges. In fact, in the penny stock space, it’s often easier to spot warning signs and red flags than it is to identify a sound investment. Nevertheless, we do our best to identify short-term trade opportunities in this exciting space because we know some of our readers are looking for high-risk, high-reward ideas. We just urge you to make sure you fully understand the risks before making any of these trades.
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