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: Esperion Therapeutics, Inc. (NASDAQ: ESPR)
Today’s penny stock pick is the pharmaceutical company, Esperion Therapeutics, Inc. (NASDAQ: ESPR).
Esperion Therapeutics, Inc. (NASDAQ: ESPR) develops and commercializes medicines for the treatment of patients with elevated low density lipoprotein cholesterol (LDL-C). Its marketed products include NEXLETOL (bempedoic acid) and NEXLIZET (bempedoic acid and ezetimibe) tablets that are oral, once-daily, non-statin medicines for the treatment of primary hyperlipidemia in adults with heterozygous familial hypercholesterolemia or atherosclerotic cardiovascular disease who require additional lowering of LDL-C.
The company’s products also include NILEMDO, an ATP Citrate Lyase (ACL) inhibitor that lowers LDL-C and cardiovascular risk by reducing cholesterol biosynthesis and up-regulating the LDL receptors; and NUSTENDI, a bempedoic acid and ezetimibe tablet to treat elevated LDL-C. The company has license and collaboration agreements with Daiichi Sankyo Co. Ltd; Otsuka Pharmaceutical Co., Ltd; and Daiichi Sankyo Europe GmbH.
Website: https://www.esperion.com/
Latest 10-k report: https://www.esperion.com/static-files/4c67a29f-5eb2-4bc8-881b-ac94fde93044
Analyst Consensus: As per TipRanks Analytics, based on 4 Wall Street analysts offering 12-month price targets for ESPR in the last 3 months, the stock has an average price target of $7.76, which is nearly 150% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company submitted New Drug Submissions (NDSs) to Health Canada for NEXLETOL and NEXLIZET, once-daily oral non-statin medications for reducing LDL cholesterol and cardiovascular risk.
- The company’s recent advancements and positive clinical trial results. Esperion’s European partner, Daiichi Sankyo Europe (DSE) recently announced positive long-term data from the MILOS clinical trial.
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.
ESPR – 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 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.
ESPR – Weekly Chart
#6 MACD above Signal Line: In the weekly chart as well, 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 ESPR is above the price of $3.25.
Target Prices: Our first target is $5.00. If it closes above that level, the second target price is $6.40.
Stop Loss: To limit risk, place a stop loss at $2.30. Note that the stop loss is on a closing basis.
Our target potential upside is 54% to 97%.
For a risk of $0.95, our first target reward is $1.75, and the second target reward is $3.15. 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. ESPR’s net losses were $209.2 million and $233.7 million for the years ending December 31, 2023, and 2022, respectively.
ESPR – Consolidated Statements of Operations
- The company depends almost entirely on the success of two products, bempedoic acid and the bempedoic acid / ezetimibe combination tablet.
- Corporate Insiders placed Informative Sells of Shares Worth $31.3K in the Last 3 Months.
Insiders | Source: TipRanks.com
- The LDL-C and cardiovascular risk lowering therapies market is highly competitive and dynamic and dominated by the sale of inexpensive generic versions of statins.
- Hedge Funds Decreased Holdings by 3.1M Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- Despite being a loss-making company, the executives are being paid significant compensation.
ESPR – 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