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: Xeris Biopharma Holdings, Inc. (NASDAQ: XERS)
Today’s penny stock pick is the biopharmaceutical company, Xeris Biopharma Holdings, Inc. (NASDAQ: XERS).
Xeris Biopharma Holdings, Inc. engages in developing and commercializing therapies in Illinois. The company markets Gvoke, a ready-to-use liquid-stable glucagon for the treatment of severe hypoglycemia; and Keveyis, a therapy for the treatment of hyperkalemic, hypokalemic, and related variants of primary periodic paralysis; and Recorlev, a cortisol synthesis inhibitor proved for the treatment of endogenous hypercortisolemia in adult patients with Cushing’s syndrome. It also has a pipeline of development programs to extend the marketed products into new indications and uses and bring new products using its proprietary formulation technology platforms, XeriSol and XeriJect.
Website: https://www.xerispharma.com
Latest 10-k report: https://xerispharma.gcs-web.com/static-files/bf8b801b-74df-47b5-abf9-33bf5d87feca
Analyst Consensus: As per TipRanks Analytics, based on 4 Wall Street analysts offering 12-month price targets for XERS in the last 3 months, the stock has an average price target of $20.17, which is nearly 620% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company recently announced an exclusive worldwide license agreement with Amgen (NASDAQ: AMGN). The agreement allows Amgen to develop, manufacture, and commercialize a “subcutaneous formulation of teprotumumab,” known as TEPEZZA in the United States, with Xeris’ XeriJect technology for Thyroid Eye Disease.
- Hedge Funds Increased Holdings by 57.4K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- Corporate Insiders placed Informative Buys of Shares Worth $144.6K in the Last 3 Months.
Insiders | 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 a high volume. Once the stock breaks out of the falling wedge pattern, it could move higher.
XERS – 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 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 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.
XERS – Weekly Chart
#6 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 XERS is above the price of $2.85.
Target Prices: Our first target is $3.80. If it closes above that level, the second target price is $4.80.
Stop Loss: To limit risk, place a stop loss at $2.30. Note that the stop loss is on a closing basis.
Our target potential upside is 33% to 68%.
For a risk of $0.55, our first target reward is $0.95, and the second target reward is $1.95. 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. For the years ended December 31, 2022, and 2021, XERS reported a net loss of $94.7 million and $122.7 million, respectively. In addition, the company’s accumulated deficit as of December 31, 2022 was $554.8 million.
XERS – Consolidated Statements of Operations
- The stock prices had been trending lower in recent quarters due to execution issues and a poor biotechnology market.
- Despite being a loss-making company, the executives are being paid significant compensation.
XERS – Executive Compensation
- Biopharmaceutical development is a time-consuming, expensive, and uncertain process. XERS may require additional capital to sustain its business, and this capital may cause dilution to the stockholders and might not be available on favorable terms.
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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