Analysts Think This $3 Stock Has Nearly 100% Upside Potential

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: Prime Medicine, Inc. (NASDAQ: PRME)

Today’s penny stock pick is the biotechnology company, Prime Medicine, Inc. (NASDAQ: PRME).

Prime Medicine, Inc. engages in delivering genetic therapies to address the spectrum of diseases by deploying gene editing technology in the United States. It offers Prime Editing technology comprising a programmable DNA binding domains, such as Cas domains, are typically modified such that they do not cause a double-stranded break in the DNA, as well as a RT domain that copies the edited DNA sequence directly into the target genomic site where the edit is made; and pegRNA which contains a search sequence, also known as a spacer, which provides a target genomic address for the Prime Editor. The company has a research collaboration with Cimeio Therapeutics to develop Prime Edited Shielded-Cell & Immunotherapy Pairs for genetic diseases, acute myeloid leukemia, and myelodysplastic syndrome.

Website:  https://primemedicine.com/

Latest 10-K report:  https://investors.primemedicine.com/static-files/0eb1fc6c-5f32-46a9-9f8d-58ef6000a171

Analyst Consensus: As per TipRanks Analytics, based on 9 Wall Street analysts offering 12-month price targets for PRME in the last 3 months, the stock has an average price target of $6.67, which is nearly 100% upside from current levels.

Potential Catalysts / Reasons for the Hype:

• The FDA’s new proposal, announced September 3, for gene therapies targeting exceptionally rare diseases (prevalence <1,000 in the US) allows for accelerated approvals with smaller datasets, like single-arm studies or n=2 patients plus confirmatory evidence. This is seen as “tailor-made” for PRME’s CGD program, potentially enabling a Priority Review Voucher (PRV) worth $100-200M if approved.
• Corporate Insiders placed Informative Buys of Shares Worth $34.9M in the Last 3 Months.
  

  Insiders | Source: TipRanks.com

• The company’s initial CGD data showed the first human evidence of Prime Editing curing genetic diseases.
• Recent capital raises and an additional $24M from the Cystic Fibrosis Foundation in July for the CF program, provide runway and support pipeline.

On analyzing the company’s stock charts, there seem to be multiple bullish indications…

Bullish Indications

#1 Symmetrical Triangle Pattern: The daily chart shows that the stock has currently formed a symmetrical triangle pattern, which is marked as purple 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.

#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 200-day SMA, indicating that the bulls have currently gained 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 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.

#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 PRME is above the price of $3.45.

Target Prices: Our first target is $4.90. If it closes above that level, the second target price is $6.00.

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 42% to 74%.

For a risk of $0.85, our first target reward is $1.45, and the second target reward is $2.55. 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:

1. The company has a history of increasing net losses. PRME’s net loss was $195.9 million and $198.1 million for the years ended December 31, 2024, and 2023, respectively.
   

   PRME – Consolidated Statements of Operations

2. The company’s pipeline is mostly pre-clinical. In addition, the Ultra-rare markets could limit revenue.
3. Hedge Funds Decreased Holdings by 1.8M Shares Last Quarter.
   

   Hedge Funds | Source: TipRanks.com

4. The company’s 25% layoffs in May 2025 and program de-prioritization could signal pivots and cost pressures.
5. Despite being a loss-making company, the executives are being paid significant compensation.
   

   PRME – 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