We recently started a series called “Penny Stock of the Day”. These ideas are geared toward 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: Reviva Pharmaceuticals Holdings, Inc. (NASDAQ: RVPH)
Today’s penny stock pick is the biopharmaceutical company, Reviva Pharmaceuticals Holdings, Inc. (NASDAQ: RVPH).
Reviva Pharmaceuticals Holdings, Inc. discovers, develops, and commercializes next-generation therapeutics for diseases targeting unmet medical needs in the areas of central nervous system, respiratory, inflammatory, and cardiometabolic diseases.
The company’s lead product candidate comprises brilaroxazine (RP5063) for the treatment of various neuropsychiatric indications, including schizophrenia, bipolar disorder, major depressive disorder, attention deficit/hyperactivity disorder, behavioral and psychotic symptoms of dementia and Alzheimer’s disease, and Parkinson’s disease psychosis; in clinical development respiratory indications, such as pulmonary arterial hypertension and idiopathic pulmonary fibrosis; and in preclinical development for the treatment of psoriasis. It is also developing RP1208 for the treatment of depression and obesity.
Website: https://www.revivapharma.com/
Latest 10-k report: https://s3.amazonaws.com/sec.irpass.cc/2805/0001437749-24-011955.pdf
Analyst Consensus: As per TipRanks Analytics, based on 2 Wall Street analysts offering 12-month price targets for RVPH in the last 3 months, the stock has an average price target of $15.00, which is nearly 433% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company is set to announce open label safety and biomarker efficacy data from its previous Phase 3 trial.
- The company is anticipated to initiate its 4-week RECOVER-2 Phase 3 trial soon. The trial results are expected in 2026.
- Rumors of an acquisition and/or partnership.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Breakout From Consolidation Area: The daily chart shows that the stock has been consolidating within a range for the past several days. This is marked as a purple color rectangle. Currently, the stock has broken out of this consolidation area and is moving higher. This is a bullish sign.
RVPH – 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 are currently in 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 color dotted line. This is a possible bullish indication. The stock is currently above its 50-day SMA, indicating that the bulls are gaining the upper hand.
RVPH – Weekly Chart
#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 RVPH is above the price of $2.90.
Target Prices: Our first target is $4.00. If it closes above that level, the second target price is $5.00.
Stop Loss: To limit risk, place a stop loss at $2.20. Note that the stop loss is on a closing basis.
Our target potential upside is 38% to 72%.
For a risk of $0.70, our first target reward is $1.10, and the second target reward is $2.10. 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. Net loss for the years ended December 31, 2023, and 2022, was approximately $39.3 million, and $28.3 million respectively.
RVPH – Consolidated Statements of Operations
- The company’s main drug candidate, Brilaroxazine, is for the treatment of schizophrenia. The schizophrenia space, which is similar to that of major depression and bipolar disorder, is highly competitive. It is dominated by quetiapine and aripiprazole.
- Although formed in May 2006, to date, the company has not generated any product revenues from its product candidates currently in development.
- Hedge Funds Decreased Holdings by 908.0K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- The original patent for brilaroxazine expires in 2030. If the drug takes longer to be approved, its patent life may be quite short to be profitable.
- Despite being a loss-making company, the executives are being paid significant compensation.
RVPH – 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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