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: Immunic, Inc. (NASDAQ: IMUX)
Today’s penny stock pick is the clinical-stage biopharmaceutical company, Immunic, Inc. (NASDAQ: IMUX).
Immunic, Inc. develops a pipeline of selective oral immunology therapies for the treatment of chronic inflammatory and autoimmune diseases. Its lead development program is IMU-838, which is in Phase 3 clinical for the treatment of multiple sclerosis, including relapsing multiple sclerosis and other chronic inflammatory and autoimmune diseases, as well as to treat coronavirus disease.
The company is also developing IMU-935, an inverse agonist of retinoic acid receptor-related orphan nuclear receptor gamma truncated; and IMU-856 for the restoration of the intestinal barrier function in patients suffering from diseases, such as celiac disease, inflammatory bowel disease, irritable bowel syndrome with diarrhea, and other intestinal barrier function diseases.
Website: https://www.imux.com
Latest 10-k report: https://app.quotemedia.com/data/downloadFiling?webmasterId=101533&ref=117274824&type=PDF&symbol=IMUX&companyName=Immunic+Inc.&formType=10-K&dateFiled=2023-02-23&CK=1280776
Analyst Consensus: As per TipRanks Analytics, based on 4 Wall Street analysts offering 12-month price targets for IMUX in the last 3 months, the stock has an average price target of $13.25, which is nearly 362% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company is heading into two key events across two strong assets: a) IMU-838 in ~225 PMS patients on track to read out key biomarker MFL and GFAP data in 2H23, and b) initiation of a Ph2b celiac disease study with IMU-856 following the positive topline results from the Ph1b part C.
- The company recently released encouraging results from its Phase 2 CALDOSE-1 Trial for testing the effectiveness of vidofludimus calcium as a treatment for moderate-to-severe ulcerative colitis.
- IMUX is also advancing biofluidic calcium for the treatment of multiple Sclerosis.
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.
IMUX – 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 looks like a good area for the stock to move higher. The stock is also trading above its 50-week SMA, indicating that the bulls are gaining control.
IMUX – 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.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for IMUX is above the price of $3.01.
Target Prices: Our first target is $4.10. If it closes above that level, the second target price is $5.00.
Stop Loss: To limit risk, place a stop loss at $2.40. Note that the stop loss is on a closing basis.
Our target potential upside is 36% to 66%.
For a risk of $0.61, our first target reward is $1.09, and the second target reward is $1.99. 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. IMUS’s net losses were $120.4 million and $92.9 million for the years ended December 31, 2022, and 2021, respectively.
IMUX – Consolidated Statements of Operations
- The company’s clinical trials have been delayed as a result of the ongoing military action by Russia in Ukraine and the continuation of this conflict could have further adverse effects on IMUX’s business.
- IMUX has not generated any revenues from commercial sales of any of its current product candidates.
- The company will require substantial additional funding toward the completion of clinical development. Raising additional capital may cause dilution to existing stockholders, restrict the company’s operations or require IMUX to relinquish rights to its technologies or product candidates.
- Despite being a loss-making company, the executives are being paid significant compensation.
IMUX – Executive Compensation
- Hedge Funds Decreased Holdings by 632.2K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
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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