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: Taysha Gene Therapies, Inc. (NASDAQ: TSHA)
Today’s penny stock pick is the gene therapy company, Taysha Gene Therapies, Inc. (NASDAQ: TSHA).
Taysha Gene Therapies, Inc. focuses on developing and commercializing adeno-associated virus-based gene therapies for the treatment of monogenic diseases of the central nervous system. It primarily develops TSHA-120 for the treatment of giant axonal neuropathy; TSHA-102 for the treatment of Rett syndrome; TSHA-121 for the treatment of CLN7 disease; TSHA-118 for the treatment of CLN1 disease; TSHA-105 for the treatment of for SLC13A5 Deficiency; and TSHA-101 for the treatment of GM2 gangliosidosis. Taysha Gene Therapies, Inc. has a strategic partnership with The University of Texas Southwestern Medical Center to develop and commercialize transformative gene therapy treatments.
Website: https://www.tayshagtx.com
Latest 10-k report: https://ir.tayshagtx.com/sec-filings/sec-filing/10-k/0000950170-23-010343
Analyst Consensus: As per TipRanks Analytics, based on 4 Wall Street analysts offering 12-month price targets for TSHA in the last 3 months, the stock has an average price target of $4.25, which is nearly 100% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company announced that it has entered into a securities purchase agreement for private placement financing that is expected to result in gross proceeds of approximately $150 million.
- TSHA reported encouraging early data from its lead program REVEAL Phase 1/2 trial for gene therapy, TSHA-102, for the rare neurodevelopmental disorder Rett syndrome.
- Cantor Fitzgerald analyst Kristen Kluska recently raised her price target on TSHA to $7 from $2 per share and maintained her Overweight rating on the stock.
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 a high volume. Once the stock breaks out of the falling wedge pattern, it could move higher.
TSHA – 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 SMA as well as 200-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. The stock is also trading above its 50-week SMA, indicating that the bulls are gaining control.
TSHA – 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 as well, 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 TSHA is above the price of $2.20.
Target Prices: Our first target is $3.00. If it closes above that level, the second target price is $3.70.
Stop Loss: To limit risk, place a stop loss at $1.70. Note that the stop loss is on a closing basis.
Our target potential upside is 36% to 68%.
For a risk of $0.50, our first target reward is $0.80, and the second target reward is $1.50. 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. TSHA’s net losses were $166.0 million and $174.5 million for the years ended December 31, 2022 and 2021, respectively.
TSHA – Consolidated Statements of Operations
- On 4/25/23, TSHA received a “Notice of Delisting or Failure to Satisfy Listing Rule or Standard” for a stock price below $1.00/share for 30 consecutive days.
- Despite being a loss-making company, the executives are being paid significant compensation.
TSHA – Executive Compensation
- Hedge Funds Decreased Holdings by 20.0K Shares Last Quarter.
- Corporate Insiders Sold Shares Worth $383.9K in the Last 3 Months.
- Drug development, particularly in the gene therapy field, is highly competitive and subject to rapid and significant technological advancements.
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!
Insiders | Source: TipRanks.com
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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