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: iBio Inc. (NYSE: IBIO)
Today’s penny stock pick is the biotechnology company, iBio Inc. (NYSE: IBIO).
iBio Inc. provides contract development and manufacturing services to collaborators and third-party customers in the United States. The company operates in two segments: Biopharmaceuticals and Bioprocessing.
Its lead therapeutic candidate is IBIO-100 which is being advanced for investigational new drug development for the treatment of systemic scleroderma and idiopathic pulmonary fibrosis. The company is also developing vaccine candidates comprising IBIO-200 and IBIO-201, which are in preclinical development for the prevention of severe acute respiratory syndrome coronavirus 2; and IBIO-400 for the treatment of classical swine fever.
In addition, it is developing recombinant proteins for third parties on a catalog and custom basis; and offers a range of process development, manufacturing, filling and finishing, and bio analytic services.
iBio, Inc. has a license agreement with Planet Biotechnology, Inc. to develop therapeutics for infectious diseases; collaboration agreement with The Texas A&M University System for the development of coronavirus disease 2019 vaccine candidates; license agreement with the University of Natural Resources and Life Sciences, Vienna; and collaboration agreement with CC-Pharming Ltd.
Website: www.biospace.com
Latest 10-k report: https://sec.report/Document/0001558370-21-012819 / https://www.nasdaq.com/market-activity/stocks/ibio/sec-filings
Analyst Consensus: As per TipRanks Analytics, the stock’s average price target is $1.50 based on 1 Wall Street analyst offering 12-month price targets for IBIO in the last 3 months.
Source: TipRanks.com
Recent Analyst Ratings | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- News of Omicron variant having at least 30 mutations in the spike (S) protein, which was the target of first-generation COVID-19 vaccines. iBio’s vaccine targets the genetically more conserved nucleocapsid, or N, protein rather than the mutable S protein.
- Rumors that FDA approval would occur in January.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Falling Wedge Pattern Breakout: The daily chart shows that the stock was forming a falling wedge pattern for the past several weeks. These are marked as pink color lines. It has typically taken support at the bottom of the wedge before bouncing back. The stock has currently broken out of the falling wedge pattern with high volume, indicating possible bullishness.
IBIO – Daily Chart
#2 Bullish ADX and DI: The ADX indicator shows bullishness as the +DI line and ADX line are above the -DI line.
#3 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
#4 Bullish Stoch: The %K line of the stochastic is above the %D line in the daily chart and is also moving up from oversold levels, indicating bullishness.
#5 Above Support Area: The weekly chart shows that the stock is trading above a strong support area, which is marked as a purple color dotted line. This is a possible bullish indication.
IBIO – Weekly Chart
#6 Bullish Stoch: In the weekly chart as well, the %K line of the stochastic is above the %D line and is currently moving higher from oversold levels. This indicates a possible bullish setup.
#7 Oversold RSI: The RSI is currently starting to move higher after reaching oversold levels, indicating that a reversal may be imminent.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for IBIO is above the price of around $0.92.
Target Prices: Our target prices are $1.40 and $1.80.
Stop Loss: To limit risk, place a stop loss at $0.63. Note that the stop loss is on a closing basis.
Our target potential upside is 52% to 96%.
For a risk of $0.29, our first target reward is $0.48, and the second target reward is $0.88. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers 2x to 3x more potential upside than downside.
Potential Risks / Red Flags:
- The company has a history of net losses.
IBIO – Consolidated Statements of Operations and Comprehensive Loss
- Despite being a loss-making company, the company executives are being paid significant compensation.
IBIO – Executive Compensation
- There are multiple competitors for the Covid-19 vaccines, with deeper pockets.
- The company had received multiple notices from NYSE. On October 16, 2019, the Company received notification from the NYSE American that the Company is not in compliance with Section 1003(a)(ii) of the NYSE American Company Guide, which applies if a listed company has stockholders’ equity of less than $4,000,000 and has reported losses from continuing operations and/or net losses in three of its four most recent fiscal years, and Section 1003(a)(iii) of the Guide, which applies if a listed company has stockholders’ equity of less than $6,000,000 and has reported losses from continuing operations and/or net losses in its five most recent fiscal years. On December 9, 2019, the Company received a further notice from the Exchange that the Company currently is below the Exchange’s continued listing standards set forth in Section 1003(a)(i) of the Guide, which applies if a listed company has stockholders’ equity of less than $2,000,000 and has reported losses from continuing operations and/or net losses in two of its three most recent fiscal years. The December 9, 2019 notification from the Exchange also stated that the Exchange has determined that the Company’s securities have been selling for a low price per share for a substantial period of time and pursuant to Section 1003(f)(v) of the Guide, the Company’s continued listing on the Exchange is predicated on the Company effecting a reverse stock split or otherwise demonstrating sustained improvement in its share price within a reasonable period of time.
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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