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: CTI BioPharma Corp (NASDAQ: CTIC)
Today’s penny stock pick is the biotech company, CTI BioPharma Corp (NASDAQ: CTIC).
CTI BioPharma Corp focuses on the acquisition, development, and commercialization of novel targeted therapies for blood-related cancers in the United States. It develops pacritinib, an investigational oral kinase inhibitor with specificity for JAK2, FLT3, IRAK1, and CSF1R, which is in Phase III clinical trials for the treatment of adult patients with myelofibrosis. It has license and collaboration agreement with Teva Pharmaceutical Industries Ltd.; S*BIO Pte Ltd.; and Vernalis (R&D) Limited.
Website: www.ctibiopharma.com
Latest 10-k report: https://sec.report/Document/0000891293-21-000008/
Analyst Consensus: As per TipRanks Analytics, based on 4 Wall Street analysts offering 12-month price targets for CTIC in the last 3 months, the stock has an average price target of $8.00, which is nearly 158% upside from current levels.
Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The news of FDA Accelerated Approval of VONJO™ (pacritinib) for the Treatment of Adult Patients with Myelofibrosis and Thrombocytopenia. VONJO is the First Approved Therapy to Specifically Address the Needs of Adult Cytopenic Myelofibrosis Patients.
- Corporate Insiders Bought Shares Worth $5.3K in the Last 3 Months.
Insiders | Source: TipRanks.com
- Three Wall Street analysts reiterated buy rating and set higher price targets for the stock.
Analysts | 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 a symmetrical triangle pattern, which is marked as purple color lines. A symmetrical triangle pattern represents a period of consolidation before the price breaks out. This is typically formed when there is indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper trend line occurs, it usually signifies the start of a new bullish trend.
CTIC – Daily Chart
#2 Bullish ADX and DI: The ADX indicator shows bullishness as the +DI line is above the -DI line, and the ADX line is currently moving higher from below the +DI and -DI lines.
#3 Price above MAs: The stock is currently above its 50-day as well as 200-day SMA, indicating that the bulls have currently gained control.
#4 Bullish Stoch: The %K line of the stochastic is above the %D line, and has also moved higher from oversold levels, indicating possible bullishness.
#5 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.
#6 Above Support Area: The weekly chart shows that the stock is currently trading above a support area, which is marked as a pink color dotted line. This is a possible bullish indication.
CTIC – Weekly Chart
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well, indicating possible bullishness.
#8 MACD above Signal Line: In the weekly chart, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for CTIC is above the price of $3.20.
Target Prices: Our first target is $5.00. If it closes above that level, the second target price is $6.80.
Stop Loss: To limit risk, place a stop loss at $2.20. Note that the stop loss is on a closing basis.
Our target potential upside is 56% to 113%.
For a risk of $1.00, our first target reward is $1.80, and the second target reward is $3.60. 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 incurred a net operating loss every year since its formation. As of December 31, 2020, CTIC had an accumulated deficit of $2.3 billion.
CTIC – Consolidated Statements of Operations
- CTIC was formerly known as Cell Therapeutics, Inc. and changed its name to CTI BioPharma Corp. in May 2014.
- Hedge Funds Decreased Holdings by 2.5M Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- Despite being a loss-making company, the company executives are being paid significant compensation.
CTIC – Executive Compensation
- In April 2009, December 2009, and June 2010, the Italian Tax Authority, or the ITA, issued notices of assessment to CTI – and concluded that CTI (Europe) did not collect and remit VAT on certain invoices issued to non-Italian clients for services performed by CTI (Europe). The assessments, including interest and penalties, for the years 2003, 2006, and 2007 are €0.6 million, €2.8 million, and €0.9 million, respectively. The company may be required to the ITA an amount up to €4.3 million.
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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