On April 26 we released our report titled "The Next VTVT-Like Runners And Buyout Candidates" featuring Celldex Therapeutics, Inc. (CLDX) and Prothena Corporation plc (PRTA). In a little over a week since then. CLDX has remained about steady, gaining one penny from $0.79 to $0.80. But PRTA has moved 19% from $11.79 to $14.01, highlighted by a 6% move on Friday. This move is particularly significant and we believe that a strong upwards move will be coming in the very near-term. We are up to 598 followers despite not giving out a lot of alerts, a fact that we think is indicative of a diligent and prudent stock picking history. If you like our picks you can follow our blog by clicking the follow button on the top of the left hand panel. You can also follow us on Twitter @StockTradePicks. We are closing in on 3,000 followers on Twitter as well.
To fully understand the potential move forthcoming on PRTA, we need to understand what can happen to biotech stocks that tank on bad news then recover to a point above the day high on the day of the downwards gap. On April 10, vTv Therapeutics Inc. (VTVT) dropped nearly 80% after announcing Phase 3 study results that didn't meet endpoints. Not only that, but VTVT has negative equity on the balance sheet, so it looked very bleak for the company. That's when it shot up from $0.83 on April 16 to as high as $2.67 on April 18.
Why did VTVT have such a violent move up? Check out the chart and price history for clues:
April 17 was key. VTVT shot up to $1.19 that day, above the day high of April 10 when it immediately tanked to $1.01 from the previous day's close of $3.26. Anyone who is familiar with basic technical analysis strategies knows the old adage that "gaps get filled", meaning that whenever there is a gap in the chart either to the upside or to the downside like what we see with VTVT, the price of the stock will return back to where it was prior to the big move, thus "filling the gap". Some data around this phenomenon suggests that over 90% actually do get filled in fairly short order.
Gap downs offer up a special case. Obviously a company that is going bankrupt and threatening to delist would be very, very risky to trade solely on expectations of a gap fill (sometimes it does happen, especially after the listing gets kicked to the OTC where it can be a lot more volatile). We believe that the key to finding a gap up candidate lies with what happened to VTVT on April 17, one day before its big move. It closed at $1.19 which was above the day high of $1.01 on April 10. You can see that quite clearly on the chart. The next day it proceeded to move to a day high of $2.67, almost closing the gap. In fact, if you look at the chart now it looks like a nearly perfect downtrend, ignoring the gap down and temporary spike back up.
Looking at VTVT's price movement foreshadows what can happen with PRTA, particularly after its 6% gain on Friday. Check out PRTA's chart and price history:
The day high on April 23 was $13.70, leaving a massive gap between that price and when the stock traded over $30. PRTA tanked after it announced that it will discontinue studies on a Phase III drug candidate. But it has since recovered from hitting a low of $10.43 to close at $14.01, above that $13.70 mark. This mimics very closely to what we see on VTVT. We expect a massive upward move in an attempt to close the gap, but maybe not quite as extreme as VTVT since the float and market cap is a lot larger. The failure of the phase III study is a negative event and PRTA should trade at a discount to where it was previously trading. But $14 is too much of a discount.
In addition to the technicals that suggest a strong move up, PRTA has the fundamentals to support a higher stock price than $14. PRTA's balance sheet data from Yahoo Finance shows total cash per share and book value per share at $10.84 and $10.58 respectively, but this data as of December 2017 doesn't tell us the full story and what really makes PRTA a strong buyout candidate.
Celgene (CELG) invested heavily into PRTA on March 20 with a $100 million upfront payment and $50 million share subscription at $42.57 per PRTA share. Assuming some cash burn, that would add another $2-3 cash per share compared to the December numbers seen above. Reading the SEC filing on the exact nature of the deal, PRTA has a chance to earn up to $700 million each on three different neurodegenerative disease targets for up to a $2.1 billion payout from Celgene. That would give Celgene a lot of incentive to consider buying out PRTA at this low price. After all, CELG did just pay $42.57 for shares a little over a month ago. With PRTA trading at just above its cash value, why not make a larger offer now while it's this cheap? So watch for the buyout rumors to start swirling as PRTA gets onto more people's radars, because it makes a lot of sense right now. Although there is no guarantee that it will happen, sometimes it's just as good to get into a trade early before market sentiment pushes it up.
We also remain very bullish on CLDX. The stock hit as high as $0.84 on Friday but pulled back down to $0.80 on light volume in the last hour of trading. The $0.80's mark is proving to be a challenge to get through but the pressure is slowly building on the chart as we see below. If the stock passes $1.00, look for CLDX to also do a VTVT-like move to fully or partially close that gap. A move to $1.50 and a slow drift down from there would align CLDX's chart very closely to VTVT's so that is our price point target.
CLDX also has cash per share of $0.99 and book value per share of $1.71 so it has the fundamentals to support a move to at least $1.00. This data is from Yahoo Finance based on year-end 2017 results so there is likely some cash burn in Q1, lowering these numbers a bit, but still well above the current stock price:
Disclosure: We are long stocks listed in this report.
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The Cryptocurrency Codex from the Cryptocurrency Institute
Secrets To Unlimited Free Bitcoin
The Crypto-Currency Evolution eBook
Bitcoin Complete Guide for Dummies
The Bitcoin Miracle Guide
The Bitcoin Cheat Code Book
The Crpytocurrency Course
Bitcoin Investing Live
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The dividend stock report from dividendstocksonline.com
To fully understand the potential move forthcoming on PRTA, we need to understand what can happen to biotech stocks that tank on bad news then recover to a point above the day high on the day of the downwards gap. On April 10, vTv Therapeutics Inc. (VTVT) dropped nearly 80% after announcing Phase 3 study results that didn't meet endpoints. Not only that, but VTVT has negative equity on the balance sheet, so it looked very bleak for the company. That's when it shot up from $0.83 on April 16 to as high as $2.67 on April 18.
Why did VTVT have such a violent move up? Check out the chart and price history for clues:
April 17 was key. VTVT shot up to $1.19 that day, above the day high of April 10 when it immediately tanked to $1.01 from the previous day's close of $3.26. Anyone who is familiar with basic technical analysis strategies knows the old adage that "gaps get filled", meaning that whenever there is a gap in the chart either to the upside or to the downside like what we see with VTVT, the price of the stock will return back to where it was prior to the big move, thus "filling the gap". Some data around this phenomenon suggests that over 90% actually do get filled in fairly short order.
Gap downs offer up a special case. Obviously a company that is going bankrupt and threatening to delist would be very, very risky to trade solely on expectations of a gap fill (sometimes it does happen, especially after the listing gets kicked to the OTC where it can be a lot more volatile). We believe that the key to finding a gap up candidate lies with what happened to VTVT on April 17, one day before its big move. It closed at $1.19 which was above the day high of $1.01 on April 10. You can see that quite clearly on the chart. The next day it proceeded to move to a day high of $2.67, almost closing the gap. In fact, if you look at the chart now it looks like a nearly perfect downtrend, ignoring the gap down and temporary spike back up.
Looking at VTVT's price movement foreshadows what can happen with PRTA, particularly after its 6% gain on Friday. Check out PRTA's chart and price history:
The day high on April 23 was $13.70, leaving a massive gap between that price and when the stock traded over $30. PRTA tanked after it announced that it will discontinue studies on a Phase III drug candidate. But it has since recovered from hitting a low of $10.43 to close at $14.01, above that $13.70 mark. This mimics very closely to what we see on VTVT. We expect a massive upward move in an attempt to close the gap, but maybe not quite as extreme as VTVT since the float and market cap is a lot larger. The failure of the phase III study is a negative event and PRTA should trade at a discount to where it was previously trading. But $14 is too much of a discount.
In addition to the technicals that suggest a strong move up, PRTA has the fundamentals to support a higher stock price than $14. PRTA's balance sheet data from Yahoo Finance shows total cash per share and book value per share at $10.84 and $10.58 respectively, but this data as of December 2017 doesn't tell us the full story and what really makes PRTA a strong buyout candidate.
Celgene (CELG) invested heavily into PRTA on March 20 with a $100 million upfront payment and $50 million share subscription at $42.57 per PRTA share. Assuming some cash burn, that would add another $2-3 cash per share compared to the December numbers seen above. Reading the SEC filing on the exact nature of the deal, PRTA has a chance to earn up to $700 million each on three different neurodegenerative disease targets for up to a $2.1 billion payout from Celgene. That would give Celgene a lot of incentive to consider buying out PRTA at this low price. After all, CELG did just pay $42.57 for shares a little over a month ago. With PRTA trading at just above its cash value, why not make a larger offer now while it's this cheap? So watch for the buyout rumors to start swirling as PRTA gets onto more people's radars, because it makes a lot of sense right now. Although there is no guarantee that it will happen, sometimes it's just as good to get into a trade early before market sentiment pushes it up.
We also remain very bullish on CLDX. The stock hit as high as $0.84 on Friday but pulled back down to $0.80 on light volume in the last hour of trading. The $0.80's mark is proving to be a challenge to get through but the pressure is slowly building on the chart as we see below. If the stock passes $1.00, look for CLDX to also do a VTVT-like move to fully or partially close that gap. A move to $1.50 and a slow drift down from there would align CLDX's chart very closely to VTVT's so that is our price point target.
CLDX also has cash per share of $0.99 and book value per share of $1.71 so it has the fundamentals to support a move to at least $1.00. This data is from Yahoo Finance based on year-end 2017 results so there is likely some cash burn in Q1, lowering these numbers a bit, but still well above the current stock price:
Disclosure: We are long stocks listed in this report.
Bitcoin has gone from a concept worth pennies a few years ago to worth thousands of dollars. It may appear to some who are late to the game that the opportunity to get rich is gone. However, there are still plenty of ways to make some money trading in bitcoin and other cryptocurrency. Here are some links to valuable reports and strategies:
The Cryptocurrency Codex from the Cryptocurrency Institute
Secrets To Unlimited Free Bitcoin
The Crypto-Currency Evolution eBook
Bitcoin Complete Guide for Dummies
The Bitcoin Miracle Guide
The Bitcoin Cheat Code Book
The Crpytocurrency Course
Bitcoin Investing Live
If you're interested in making money investing or trading the stock market, here are some good resources to assist you. This includes technical analysis, investing in the weed sector, dividend stock investing, gold and commodities, sector rotation, options trading and microcap trading strategies.
Microcap Millionaires Free Video: Cheap Gold Miner Set to Soar in Fall 2017
The dividend stock report from dividendstocksonline.com
The dividend stock report from Dividend Stocks Rock
Top rated signals for binary options from binaryoptionsprosignals.com
Goldmasterinvesting.com Ocean Of Gold Report for the top 15 gold mining companies
Trader Review shows how to time the market with its "Percent of X" indicator
The Trader's Academy Club
The Wealth Builder's Club from beatthemarketanalyzer.com
MyBB: A Forum For Investors and Traders
Spartan Trader Forex Academy Live Daily Trading Room
Try the Z Code System if you're looking for other ways to make money systematically outside of the stock market.
Top rated signals for binary options from binaryoptionsprosignals.com
Goldmasterinvesting.com Ocean Of Gold Report for the top 15 gold mining companies
Trader Review shows how to time the market with its "Percent of X" indicator
The Trader's Academy Club
The Wealth Builder's Club from beatthemarketanalyzer.com
MyBB: A Forum For Investors and Traders
Spartan Trader Forex Academy Live Daily Trading Room
Try the Z Code System if you're looking for other ways to make money systematically outside of the stock market.
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