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: Atossa Therapeutics, Inc. (NASDAQ: ATOS)
Today’s penny stock pick is the clinical-stage biopharmaceutical company, Atossa Therapeutics, Inc. (NASDAQ: ATOS).
Atossa Therapeutics, Inc. focuses on developing medicines in the areas of unmet medical needs in oncology. The company’s lead program is Endoxifen, an active metabolite of tamoxifen, which is in Phase II clinical trials to treat and prevent breast cancer. It is also developing AT-H201 for lung injury caused by cancer treatment. In addition, the company develops immunotherapy/chimeric antigen receptor therapy programs. It has a research agreement with Dana-Farber Cancer Institute, Inc. to support the research of cytokine-coated nanoparticles for the treatment of breast cancer.
Website: https://atossatherapeutics.com
Latest 10-k report: https://investors.atossatherapeutics.com/static-files/21a99b65-d247-422d-a58c-342daed049b4
Analyst Consensus: As per TipRanks Analytics, based on 3 Wall Street analysts offering 12-month price targets for ATOS in the last 3 months, the stock has an average price target of $5.42, which is nearly 266% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company announced the completion of enrollment for the 80mg pharmacokinetic run-in cohort in its Phase 2 EVANGELINE clinical trial. This study evaluates (Z)-endoxifen as a neoadjuvant treatment for ER+ / HER2- breast cancer. The cohort includes 12 pre-menopausal women who will receive 80mg/day of (Z)-endoxifen for four weeks.
- Director Jonathan Finn had purchased shares of the company’s common stock. The transaction, dated April 10, 2024, involved the acquisition of 25,000 shares at an average price of $1.77 per share, totaling $44,250.
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.
ATOS – 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 SMA, indicating that the bulls are gaining control.
ATOS – Weekly Chart
#6 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, 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 ATOS is above the price of $1.50.
Target Prices: Our first target is $1.90. If it closes above that level, the second target price is $2.30.
Stop Loss: To limit risk, place a stop loss at $1.25. Note that the stop loss is on a closing basis.
Our target potential upside is 27% to 53%.
For a risk of $0.25, our first target reward is $0.40, and the second target reward is $0.80. 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:
- The company has a history of net losses. For the year ended December 31, 2023, ATOS incurred a net loss of approximately $30.1 million. The company also had an accumulated deficit of approximately $186.3 million since its inception.
ATOS – Consolidated Statements of Operations
- On September 26, 2023, ATOS was notified by Nasdaq that it was not in compliance with Nasdaq Listing Rule 5550(a)(2) because its common stock failed to maintain a minimum closing bid price of $1.00 per share for 30 consecutive business days.
- Hedge Funds Decreased Holdings by 73.1K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- ATOS competes in an industry that is characterized by rapid technological change, evolving industry standards, emerging competition, and new product introductions. The company faces intense competition from large pharmaceutical and biotechnology companies, as well as academic and research institutions.
- Despite being a loss-making company, the executives are being paid significant compensation.
ATOS – 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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Source: Trades of the Day