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: scPharmaceuticals Inc. (NASDAQ: SCPH)
Today’s penny stock pick is the pharmaceutical company, scPharmaceuticals Inc. (NASDAQ: SCPH).
scPharmaceuticals Inc. focuses on developing and commercializing products to optimize the delivery of infused therapies and patient care. The company’s lead product candidate is FUROSCIX that consists of formulation of furosemide, which is delivered through an on-body infusor for the treatment of congestion due to fluid overload in adults with chronic heart failure and kidney disease, as well as consists of subcutaneous loop diuretic that delivers IV equivalent diuresis at home; and FUROSCIX On-Body Infusor, a drug-device combination product consisting of FUROSCIX.
Its product pipeline also includes SCP-111 (furosemide injection), an investigational pH neutral aqueous furosemide formulation that is being developed for subcutaneous administration outside of the hospital setting, including patient self-administration in the home; and SCP-111 Autoinjector, an investigational single-entity and drug-device combination product candidate consisting of a prefilled syringe containing SCP-111 preloaded into a mechanical autoinjector.
Website: https://www.scpharmaceuticals.com/
Latest 10-k report: https://ir.scpharmaceuticals.com/static-files/1bab44d0-514e-4d24-ba8d-be6319ad7c18
Analyst Consensus: As per TipRanks Analytics, based on 5 Wall Street analysts offering 12-month price targets for SCPH in the last 3 months, the stock has an average price target of $15.60, which is nearly 343% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company is targeting CKD and Class IV heart failure patients, with launches planned for 2025. Successful penetration could significantly boost revenue.
- Management had recently reported progress toward an autoinjector version of FUROSCIX. Its approval could be a significant catalyst as it could improve patient convenience and drive adoption.
- Recent changes in Medicare coverage are also seen as a tailwind. The improved Medicare reimbursement for FUROSCIX enhances profitability and market access, particularly for heart failure patients.
- Hedge Funds Increased Holdings by 262.2K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- Rumors of a takeover if FUROSCIX gains traction, given its unique delivery system and small market cap.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Downtrend Channel Breakout: The daily chart shows that the stock has broken out of a downtrend channel, which is shown as purple lines. This is a possible bullish indication.
SCPH – 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 MA: The stock is currently above its 50-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 dotted line. This looks like a good area for the stock to move higher.
SCPH – 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 SCPH is above the price of $3.70.
Target Prices: Our first target is $5.60. If it closes above that level, the second target price is $7.00.
Stop Loss: To limit risk, place a stop loss at $2.60. Note that the stop loss is on a closing basis.
Our target potential upside is 51% to 89%.
For a risk of $1.10, our first target reward is $1.90, and the second target reward is $3.30. 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. SCPH incurred net losses of $54.8 million and $85.1 million for the years ended December 31, 2023, and 2024, respectively.
SCPH – Consolidated Statements of Operations
- The company may need additional capital (equity offering) to extend its cash runway, which could dilute shares.
- Broader market concerns, such as tariffs on pharmaceuticals or economic slowdowns, could indirectly pressure SCPH’s growth.
- Despite being a loss-making company, the executives are being paid significant compensation.
SCPH – Executive Compensation
- The company faces competition from other companies in the pharmaceutical and medical device industries. It also has a limited operating history and no history of commercializing pharmaceutical products, which may make it difficult to evaluate the prospects for the company’s future viability.
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
