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: Fractyl Health, Inc. (NASDAQ: GUTS)
Today’s penny stock pick is the biotech company, Fractyl Health, Inc. (NASDAQ: GUTS).
Fractyl Health, Inc. develops therapies for the treatment of type 2 diabetes (T2D) and obesity. The company develops Revita DMR System (Revita), an outpatient procedural therapy designed to durably modify duodenal dysfunction, a pathologic consequence of a high fat and high sugar diet, which can initiate T2D and obesity in humans.
It develops Rejuva, a novel adeno-associated virus delivered pancreatic gene therapy platform that is designed to enable long-term remission of T2D and obesity by durably altering metabolic hormone function in the pancreatic islet cells of patients. Fractyl Health, Inc. was formerly known as Fractyl Laboratories Inc. and changed its name to Fractyl Health, Inc. on June 09, 2021.
Website: https://fractyl.com/
Latest 10-k report: https://ir.fractyl.com/static-files/31d84d9a-2b3f-4fbc-a532-487b5292f009
Analyst Consensus: As per TipRanks Analytics, based on 5 Wall Street analysts offering 12-month price targets for GUTS in the last 3 months, the stock has an average price target of $6.52, which is nearly 335% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The groundbreaking data from the REMAIN-1 study showed 12 of 13 participants maintained weight loss after stopping GLP-1 drugs, positioning Revita as a potential “off-ramp” for long-term obesity management.
- The company’s $60M underwritten offering priced at $1/share (closing ~Sep 29, 2025) provides runway for R&D and operations, boosting investor confidence amid positive trial results.
- There is increasing interest in the obesity treatment space. Revita’s differentiation (non-pharmacological) aligns with demand for alternatives to ongoing GLP-1 use.
- The company’s small market cap and high analyst upside potential make it attractive for speculative traders to come in.
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.
GUTS – 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.
GUTS – 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 GUTS is above the price of $1.60.
Target Prices: Our first target is $2.60. If it closes above that level, the second target price is $3.50.
Stop Loss: To limit risk, place a stop loss at $1.00. Note that the stop loss is on a closing basis.
Our target potential upside is 63% to 119%.
For a risk of $0.60, our first target reward is $1.00, and the second target reward is $1.90. 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.
GUTS – Consolidated Statements of Operations
- The recent $60M offering adds nearly 60M new shares, potentially pressuring the stock short-term due to increased supply and shareholder dilution.
- Hedge Funds Decreased Holdings by 21.8K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- The company’s Q2 2025 results showed substantial R&D increases, typical for clinical-stage biotechs but raising concerns about burn rate without near-term revenue.
- Despite being a loss-making company, the executives are being paid significant compensation.
GUTS – 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
