Analysts Think This $1 Stock Has 150%-Plus Upside Potential

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: Lexicon Pharmaceuticals, Inc. (NASDAQ: LXRX)

Today’s penny stock pick is the biopharmaceutical company, Lexicon Pharmaceuticals, Inc. (NASDAQ: LXRX).

Lexicon Pharmaceuticals, Inc. focuses on the discovery, development, and commercialization of pharmaceutical products. Its orally-delivered small molecule drug candidates under development comprise Sotagliflozin which completed Phase III clinical trials for the treatment of heart failure and type 1 diabetes; LX9211, which is in Phase II clinical development for the treatment of neuropathic pain and LX2761, which is in Phase I clinical development for gastrointestinal tract. The company has strategic collaboration and license agreements with Bristol-Myers Squibb Company, and Genentech, Inc. The company was incorporated in 1995 and is headquartered in The Woodlands, Texas.

Website:  https://www.lexpharma.com

Latest 10-K report:   https://investors.lexpharma.com/static-files/775c63dc-efb5-4c6f-9899-572a60b24ad3

Analyst Consensus: As per TipRanks Analytics, based on 4 Wall Street analysts offering 12-month price targets for LXRX in the last 3 months, the stock has an average price target of $2.96, which is nearly 157% upside from current levels.

Potential Catalysts / Reasons for the Hype:

• LXRX reported progress in diabetic peripheral neuropathic pain (DPNP) treatments, including new studies for pilavapadin and expansion of LX9851 partnership with Novo Nordisk, which could unlock up to $1 billion in milestones.
• The company’s Q2 earnings beat has created optimism, with investors viewing LXRX as undervalued due to its pipeline and partnerships.
• Upcoming milestones include the completion of IND-enabling studies for LX9851, followed by IND submission and clinical initiation; Phase 3 start for pilavapadin in DPNP; and potential milestone payments from Novo Nordisk partnership.

On analyzing the company’s stock charts, there seem to be multiple bullish indications…

Bullish Indications

#1 Flag Pattern Breakout: The daily chart shows that the stock has broken out of a flag pattern, which is shown as purple lines. This is a possible bullish indication.

#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 Above Support Area: The weekly chart shows that the stock is currently trading above a support area, which is marked as a pink 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.

#6 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 LXRX is above the price of $1.20.

Target Prices: Our first target is $2.20. If it closes above that level, the second target price is $3.00.

Stop Loss: To limit risk, place a stop loss at $0.60. Note that the stop loss is on a closing basis.

Our target potential upside is 83% to 150%.

For a risk of $0.60, our first target reward is $1.00, and the second target reward is $1.80. 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:

1. The company has a history of net losses.
   

   LXRX – Consolidated Statements of Operations

2. The company ended Q2 2025 with $168 million in cash and equivalents, down from $238 million at the end of 2024, indicating ongoing burn rates despite cost cuts
3. Hedge Funds Decreased Holdings by 229.4K Shares Last Quarter.
   

   Hedge Funds | Source: TipRanks.com

4. The broader biotech funding challenges and competition in neuropathic pain treatments could delay milestones.
5. The company has a history of non-compliance with NASDAQ. LXRX was notified by the NASDAQ Stock Market earlier this year that it no longer met the minimum bid price requirement, according to an 8-K filing with the Securities and Exchange Commission.
6. Despite being a loss-making company, the executives are being paid significant compensation.
   

   LXRX – 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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