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: Corbus Pharmaceuticals Holdings Inc. (NASDAQ: CRBP)
Today’s penny stock pick is the biopharmaceutical company, Corbus Pharmaceuticals Holdings Inc. (NASDAQ: CRBP).
Corbus Pharmaceuticals Holdings Inc. focuses on the development of immune modulators for immuno-oncology and fibrosis diseases. It develops lenabasum, an oral molecule that selectively activates cannabinoid receptor type 2 (CB2), which is in Phase II clinical trial to treat systemic lupus erythematosus; CRB-601, an anti-integrin monoclonal antibody (mAb) for the treatment of cancer and fibrosis that inhibits the activation of transforming growth factor ß (TGFß); and CRB-602, an anti-avß6/avß8 mAb that blocks the activation of TGFß for the treatment of fibrotic diseases.
The company is also developing cannabinoid receptor type 1 inverse agonist program for the treatment of metabolic disorders, such as obesity, diabetic nephropathy, diabetic retinopathy, and nonalcoholic steatohepatitis; fibrotic diseases, including lung, cardiac, renal disease, and liver fibrosis; and other diseases comprising ascites, cognitive defects, Prader-Willi syndrome, and smoking cessation. It has a licensing agreement with Jenrin Discovery, LLC to develop and commercialize the licensed products, including the Jenrin library of approximately 600 compounds, and multiple issued and pending patent filings.
Website: www.corbuspharma.com
Latest 10-k report: https://sec.report/Document/0000950170-22-003145
Analyst Consensus: As per TipRanks Analytics, based on 2 Wall Street analysts offering 12-month price targets for CRBP in the last 3 months, the stock has an average price target of $3.00, which is nearly 809% upside from current levels.
Source: TipRanks.com
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- Upcoming topline results from Phase 2 study of lenabasum in systemic lupus erythematosus. The results from the phase 3 trial are expected to be presented at the annual European Congress of Rheumatology meeting (EULAR) next month.
- Corporate Insiders Bought Shares Worth $18.7K 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: 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 currently looks poised for a breakout from the falling wedge pattern. Once the stock breaks out of the falling wedge pattern, it could move higher.
CRBP – 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.
CRBP – Weekly Chart
#6 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well, and is also moving higher from oversold levels, 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 CRBP is above the price of $0.35.
Target Prices: Our first target is $0.55. If it closes above that level, the second target price is $0.70.
Stop Loss: To limit risk, place a stop loss at $0.25. Note that the stop loss is on a closing basis.
Our target potential upside is 57% to 100%.
For a risk of $0.10, our first target reward is $0.20, and the second target reward is $0.35. 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, with an accumulated deficit of approximately $349.7 million. CRBP’s net losses for the years ended December 31, 2021, and December 31, 2020, were approximately $45,640,000 and $111,269,000, respectively.
CRBP – Consolidated Statements of Operations
- On January 3, 2022, the company received a letter from the Listing Qualifications Staff of the Nasdaq Stock Market, LLC indicating that, based upon the closing bid price of CRBP’s common stock for the last 30 consecutive business days, the company is not in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on the Nasdaq Global Market, as set forth in Nasdaq Listing Rule 5550(a)(2). If CRBP does not regain compliance within the allotted compliance periods, including any extensions that may be granted by Nasdaq, Nasdaq will provide notice that the company’s common stock will be subject to delisting.
- Hedge Funds Decreased Holdings by 25.6K Shares Last Quarter.
Hedge Fund | Source: TipRanks.com
- On November 18, 2021, Venn Therapeutics, LLC, filed a complaint against CRBP in the U.S. District Court for the Middle District of Florida. The Complaint asserts claims for trade secret misappropriation under federal law and state law, a claim for breach of contract, and state law claims for unfair competition, misrepresentation, unjust enrichment, and intentional interference with advantageous business relations.
- Despite being a loss-making company, the executives are being paid significant compensation.
CRBP – 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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