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: aTyr Pharma, Inc. (NASDAQ: ATYR)
Today’s penny stock pick is the biotherapeutics company, aTyr Pharma, Inc. (NASDAQ: ATYR).
aTyr Pharma, Inc. engages in the discovery and development of medicines based on novel immunological pathways in the United States. Its lead therapeutic candidate is efzofitimod, a selective modulator of NRP2 that is in Phase III clinical trial for pulmonary sarcoidosis; and in Phase 1b/2a clinical trial for the treatment of other interstitial lung diseases (ILDs), such as chronic hypersensitivity pneumonitis and connective tissue disease-related ILD.
The company is developing ATYR0101, a fusion protein derived from a domain of aspartyl-tRNA synthetase that is in preclinical development for the treatment of fibrosis; and ATYR0750, a domain of alanyl-tRNA synthetase for the treatment of liver disorders. It has a collaboration and license agreement with Kyorin Pharmaceutical Co., Ltd. for the development and commercialization of efzofitimod for ILDs in Japan.
Website: https://www.atyrpharma.com/
Latest 10-k report: https://investors.atyrpharma.com/static-files/d7c1b9bb-ff88-485d-9876-0cc6db339488
Analyst Consensus: As per TipRanks Analytics, based on 15 Wall Street analysts offering 12-month price targets for ATYR in the last 3 months, the stock has an average price target of $21.80, which is nearly 413% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The promising prospects of Efzofitimod, the company’s lead therapeutic candidate. The topline results of phase 3 efzofitimod is expected in the third quarter of 2025.
- ATYR’s recent amendment to its sales agreement with Jefferies LLC, allows for additional shares to be offered, potentially raising more capital.
- Leerink Partners initiated coverage of aTyr Pharma with an Outperform recommendation.
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.
ATYR – 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 Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates bullishness.
#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 and 200-week SMA, indicating that the bulls are gaining control.
ATYR – Weekly Chart
#6 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, indicating possible bullishness.
#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 ATYR is above the price of $4.30.
Target Prices: Our first target is $5.90. If it closes above that level, the second target price is $7.00.
Stop Loss: To limit risk, place a stop loss at $3.40. Note that the stop loss is on a closing basis.
Our target potential upside is 37% to 63%.
For a risk of $0.90, our first target reward is $1.60, and the second target reward is $2.70. 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 increasing net losses. As of December 31, 2023, the company had an accumulated deficit of $468.0 million.
ATYR – Consolidated Statements of Operations
- The company has not yet generated any revenues from product sales.
- ATYR requires additional capital in the future to continue its planned operations and may seek additional funding through a combination of equity offerings, debt, grant funding, collaborations, strategic partnerships, and/or licensing arrangements. This could result in dilution to stockholders.
- Despite being a loss-making company, the executives are being paid significant compensation.
ATYR – 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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