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: X4 Pharmaceuticals, Inc. (NASDAQ: XFOR)
Today’s penny stock pick is the late-stage clinical biopharmaceutical company, X4 Pharmaceuticals, Inc. (NASDAQ: XFOR).
X4 Pharmaceuticals, Inc. focuses on the research, development, and commercialization of novel therapeutics for the treatment of rare diseases. Its lead product candidate is mavorixafor, a small molecule inhibitor of the chemokine receptor C-X-C chemokine receptor type 4 (CXCR4), which is in Phase III clinical trial for the treatment of patients with warts, hypogammaglobulinemia, infections, and myelokathexis syndrome; and Phase Ib clinical trial to treat chronic neutropenia and Waldenström macroglobulinemia.
The company is also developing X4P-002, a CXCR4 antagonist for the treatment of brain cancers; and X4P-003, a CXCR4 antagonist for the treatment of CXCR4 disorders and primary immunodeficiencies. It has a license agreement with Abbisko Therapeutics Co., Ltd. to develop, manufacture, and commercialize mavorixafor in combination with checkpoint inhibitors or other agents in oncology indications.
Website: https://www.x4pharma.com
Latest 10-k report: https://investors.x4pharma.com/sec-filings/sec-filing/10-k/0001628280-23-008745
Analyst Consensus: As per TipRanks Analytics, based on 7 Wall Street analysts offering 12-month price targets for XFOR in the last 3 months, the stock has an average price target of $3.50, which is nearly 207% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- XFOR reported that its submitted late-breaker abstract entitled “Results of a Phase 3 Trial of an Oral CXCR4 Antagonist, Mavorixafor, for Treatment of Patients With WHIM Syndrome” has been accepted for oral presentation at the Annual Meeting of the Clinical Immunology Society, which is taking place May 18-21, 2023, in St. Louis, MO. New data related to clinical secondary endpoints, among other assessments, are to be presented.
- In November 2022, X4 announced that the 4WHIM trial had met its primary endpoint and a key secondary endpoint and that mavorixafor was generally well tolerated in the trial, with no treatment-related serious adverse events reported and no discontinuations for safety events.
- Upcoming expected milestones for investigational therapy mavorixafor in WHIM syndrome include: presentation of additional Phase 3 clinical data in 2Q 2023, NDA submission in early 2H 2023, and potential U.S. launch in 1H 2024. Announcement of data from the ongoing chronic neutropenia Phase 2 trial and clarity on the regulatory path forward has been planned for 2Q or 3Q 2023.
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.
XFOR – 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 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 looks like a good area for the stock to move higher.
XFOR – Weekly Chart
#7 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 XFOR is above the price of $1.20.
Target Prices: Our first target is $1.80. If it closes above that level, the second target price is $2.20.
Stop Loss: To limit risk, place a stop loss at $0.90. Note that the stop loss is on a closing basis.
Our target potential upside is 50% to 83%.
For a risk of $0.30, our first target reward is $0.60, and the second target reward is $1.00. 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. As of December 31, 2022, the Company had an accumulated deficit of $376.7 million, and a net loss of $93.9 million.
XFOR – Consolidated Statements of Operations
- The company has not generated revenue from product sales since its inception.
- Despite being a loss-making company, the executives are being paid significant compensation.
XFOR – Executive Compensation
- In December 2022, the company completed a public offering that yielded gross proceeds of approximately $65.0 million. This has resulted in additional dilution.
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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