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: Annexon, Inc. (NASDAQ: ANNX)
Today’s penny stock pick is the clinical-stage biopharmaceutical company, Annexon, Inc. (NASDAQ: ANNX).
Annexon, Inc. discovers and develops medicines for treating inflammatory-related diseases. The company’s lead candidate is ANX005, an investigational full-length monoclonal antibody, which is in Phase 3 clinical trial for the treatment of patients with guillain-barré syndrome; completed Phase II clinical trial for treating Huntington’s disease; and in Phase 2a clinical trial for the treatment of amyotrophic lateral sclerosis.
The company is also developing ANX007, an antigen-binding fragment (Fab) that is in Phase 3 program for the treatment of patients with geographic atrophy; and ANX1502, a novel oral small molecule inhibitor, which is in Phase 1 clinical trials for autoimmune indications. In addition, it develops ANX009, a C1q-blocking Fab that is in Phase I clinical trial for treating patients with lupus nephritis.
Website: https://www.annexonbio.com/
Latest 10-K report: https://ir.annexonbio.com/static-files/68079969-3010-40f8-bb05-c2f6bcac62d6
Analyst Consensus: As per TipRanks Analytics, based on 5 Wall Street analysts offering 12-month price targets for ANNX in the last 3 months, the stock has an average price target of $10.75, which is nearly 165% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company benefits from a robust pipeline, including ANX005 for Guillain-Barré Syndrome (GBS), ANX007 for Geographic Atrophy (GA), and ANX1502 (oral) for autoimmune conditions.
- The company maintains a strong, debt-free balance sheet, with cash reserves sufficient to fund operations through key milestones into 2026 or beyond.
- The company’s clinical progress, such as early completion of Phase 3 ARCHER II enrollment in July 2025, supports momentum.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Uptrend Channel Breakout: The daily chart shows that the stock has broken out of an uptrend channel, which is shown as purple color lines. This is a possible bullish indication.
ANNX – 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 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 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.
ANNX – Weekly Chart
#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 ANNX is above the price of $4.10.
Target Prices: Our first target is $5.80. If it closes above that level, the second target price is $6.70.
Stop Loss: To limit risk, place a stop loss at $3.30. Note that the stop loss is on a closing basis.
Our target potential upside is 41% to 63%.
For a risk of $0.80, our first target reward is $1.70, and the second target reward is $2.60. 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. As of December 31, 2024, ANNX had an accumulated deficit of $710.7 million.
ANNX – Consolidated Statements of Operations
- The recent dilution from a $75 million public offering could pressure the stock short-term.
- Hedge Funds Decreased Holdings by 20.0K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- The company faces significant competition in the complement inhibitor space.
- Despite being a loss-making company, the executives are being paid significant compensation.
ANNX – 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
