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: Athersys Inc. (NASDAQ: ATHX)
Today’s penny stock pick is the clinical-stage biotechnology company, Athersys Inc. (NASDAQ: ATHX).
Athersys Inc. focuses on the research and development activities in the field of regenerative medicine. Its clinical development programs are focused on treating neurological conditions, cardiovascular diseases, inflammatory and immune disorders, and pulmonary and other conditions.
The company’s lead platform product includes MultiStem cell therapy, an allogeneic stem cell product, which is in Phase III clinical study for the treatment of patients suffering from neurological damage from an ischemic stroke, as well as for acute respiratory distress syndrome, trauma complications, HSC transplant support, and other indications. It also develops MultiStem cell therapy to promote tissue repair and healing for animal patients, including those suffering from serious conditions with unmet medical needs.
The company has license and collaboration agreements with Healios K.K. to develop and commercialize MultiStem cell therapy for ischemic stroke, acute respiratory distress syndrome, and ophthalmological indications, as well as for the treatment of liver, kidney, pancreas, and intestinal tissue diseases; and the University of Minnesota to develop MultiStem cell therapy platform.
Website: www.athersys.com
Latest 10-k report: https://sec.report/Document/0001368148-22-000020/
Analyst Consensus: As per TipRanks Analytics, based on 3 Wall Street analyst offering 12-month price targets for ATHX in the last 3 months, the stock has an average price target of $4.33, which is nearly 659% upside from current levels.
Source: TipRanks.com
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- Upcoming announcement of topline data from ATHX’s Japanese partner, HEALIOS for its Phase 2/3 TREASURE study.
- Corporate Insiders Bought Shares Worth $102.3K 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 Downtrend Channel: The daily chart shows that the stock is trading within a downtrend channel, which is shown as orange color lines. The stock currently looks poised for a breakout from this downtrend channel. This is a possible bullish indication.
ATHX – 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 Bullish Stoch: The %K line of the stochastic is above the %D line, and has also moved higher from oversold levels, indicating possible bullishness.
#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 is a possible bullish indication.
ATHX – Weekly Chart
#6 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 ATHX is above the price of $0.60.
Target Prices: Our first target is $1.10. If it closes above that level, the second target price is $1.70.
Stop Loss: To limit risk, place a stop loss at $0.30. Note that the stop loss is on a closing basis.
Our target potential upside is 83% to 183%.
For a risk of $0.30, our first target reward is $0.50, and the second target reward is $1.10. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers 2x to 4x more potential upside than downside.
Potential Risks / Red Flags:
- The company has a history of net losses. ATHX has incurred net losses of $87.0 million in 2021, $78.8 million in 2020, and $44.6 million in 2019. As of December 31, 2021, the company had an accumulated deficit of $583.3 million.
ATHX – Consolidated Statements of Operations and Comprehensive Loss
- Hedge Funds Decreased Holdings by 10.0K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- The company’s clinical product candidates have not yet received regulatory approval for commercialization.
- Despite being a loss-making company, the executives are being paid significant compensation.
ATHX – 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.