We recently started a series called “Penny Stock of the Day”. These ideas are geared towards 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: Precigen Inc. (NASDAQ: PGEN)
Today’s penny stock pick is the American biotechnology company, Precigen Inc. (NASDAQ: PGEN).
Precigen Inc. discovers and develops the next generation of gene and cellular therapies in the United States. It also provides disease-modifying therapeutics; genetically engineered swine for regenerative medicine applications; and reproductive and embryo transfer technologies.
In addition, the company offers UltraVector platform that incorporates advanced DNA construction technologies and computational models to design and assemble genetic components into complex gene expression programs; mbIL15, a gene that enhances functional characteristics of immune cells; Sleeping Beauty, a non-viral transposon/transposase system; AttSite recombinases, which breaks and rejoins DNA at specific sequences; AdenoVerse technology platform, a library of engineered adenovector serotypes; and L. lactis is a food-grade bacterium.
Additionally, it provides RheoSwitch, an inducible gene switch system that provides quantitative dose-proportionate regulation of the amount and timing of target protein expression; kill switches to selectively eliminate cell therapies in vivo; tissue-specific promoters; UltraCAR-T platform for the treatment of cancer; AdenoVerse Immunotherapy, a library of proprietary adenovectors for the gene delivery; and ActoBiotics platform, genetically modified bacteria that deliver proteins and peptides at mucosal sites. Precigen, Inc. has collaboration and license agreements with Alaunos Therapeutics, Inc.; Ares Trading S.A.; Oragenics, Inc.; Castle Creek Biosciences, Inc.; Intrexon Energy Partners, LLC; and Intrexon Energy Partners II, LLC.
Website: https://www.precigen.com
Latest 10-k report: https://sec.report/Document/0001356090-22-000002
Analyst Consensus: As per TipRanks Analytics, based on 3 Wall Street analysts offering 12-month price targets for PGEN in the last 3 months, the stock has an average price target of $13.33, which is nearly 724% upside from current levels.
Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company entered into an agreement with URUS to sell wholly-owned subsidiary Trans Ova Genetics to URUS for $170 million in upfront cash and up to $10 million earn-out over two years.
- Rumors of takeovers due to the company’s ULTRA CAR-T patent.
- Hedge Funds Increased Holdings by 1.3M Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- JMP Securities reiterated ‘Buy’ rating and set a price target of $13 for PGEN.
Analysts | Source: TipRanks.com
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 has been forming a falling wedge pattern for the past several months. These are marked as purple color lines. It has typically taken support at the bottom of the wedge before bouncing back. The stock has currently broken out from the falling wedge pattern with high volume. Once the stock breaks out of the falling wedge pattern, it could move higher.
PGEN – 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 MA: The stock is currently above its 50-day SMA, indicating that the bulls have currently gained control.
#4 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.
#5 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates bullishness.
#6 Downtrend Channel Breakout: The weekly chart shows that the stock has broken out of a downtrend channel, which is shown as orange color lines. This is a possible bullish indication.
PGEN – Weekly Chart
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, 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 PGEN is above the price of $1.70.
Target Prices: Our first target is $2.60. If it closes above that level, the second target price is $3.40.
Stop Loss: To limit risk, place a stop loss at $1.20. Note that the stop loss is on a closing basis.
Our target potential upside is 53% to 100%.
For a risk of $0.50, our first target reward is $0.90, and the second target reward is $1.70. 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, including net losses of $92.2 million, $170.5 million, and $322.3 million in 2021, 2020, and 2019, respectively.
PGEN – Consolidated Statements of Operations
- The company was formerly known as Intrexon Corporation and Genomatix, Inc. and changed its name to Precigen, Inc. in January 2020.
- The company has engaged in transactions with companies in which Randal J. Kirk, PGEN’s Executive Chairman, and his affiliates have an interest. As of December 31, 2021, Randal J. Kirk controlled approximately 40 percent of the company’s common stock. If any conflict arises between the company’s interests and those of Mr. Kirk and his affiliates, and the company’s stocks are sold off, it could cause the market price of PGEN’s common stock to drop significantly.
- Despite being a loss-making company, the executives are being paid millions as compensation.
PGEN – Executive Compensation
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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