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). CLDX was close to breaking out several times but could never quite pass through that mid-$0.80's mark which was key to getting to a larger breakout. It is down to $0.73 for a small loss. But PRTA has done exactly what we expected it to do. In our report from last week, "Breakout Alert: PRTA To Fill That Gap", we outlined why we believe PRTA will move quickly upwards. For a stock that trades at over a $600 million market cap it has. PRTA moved up 12% to $15.72 on the week but that includes a recovery from a drop to as low as $12.04 after a sell-off from the earnings announcement. That's on top of the 19% move we saw from $11.79 to $14.01 since April 26 for a 33% gain in total. We think it will challenge the $20 level in short order. We are up to 608 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.
Looking at VTVT's price movement foreshadows what is happening and what may still be to come on PRTA. 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 to pass that $13.70 mark again and it has accelerated its move upward as evidenced by looking at the two large white candlesticks seen on the chart over the last two days. This mimics closely to what we see on VTVT, though it won't trade quite as wildly because PRTA's float and market cap are much higher than VTVT so the phenomenon is spread out over several trading days. At least a partial gap close to $20 seems reasonable, but who knows how high it can go given its unique and opportunistic chart situation. 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 $16 is still 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 $16. PRTA's Q1 balance sheet shows $433 million in cash and $100 million in accounts receivable against only $35 million in current cash liabilities. That is about $500 million in liquid net assets for a stock with a market cap of $626 million at $15.72. But that doesn't tell us the full story why PRTA makes a great buyout candidate.
Celgene (CELG) invested heavily into PRTA on March 20 with a $100 million upfront payment (the source of the accounts receivable) and $50 million share subscription at $42.57 per PRTA share. 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 liquid net asset 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.
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
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.
Looking at VTVT's price movement foreshadows what is happening and what may still be to come on PRTA. 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 to pass that $13.70 mark again and it has accelerated its move upward as evidenced by looking at the two large white candlesticks seen on the chart over the last two days. This mimics closely to what we see on VTVT, though it won't trade quite as wildly because PRTA's float and market cap are much higher than VTVT so the phenomenon is spread out over several trading days. At least a partial gap close to $20 seems reasonable, but who knows how high it can go given its unique and opportunistic chart situation. 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 $16 is still 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 $16. PRTA's Q1 balance sheet shows $433 million in cash and $100 million in accounts receivable against only $35 million in current cash liabilities. That is about $500 million in liquid net assets for a stock with a market cap of $626 million at $15.72. But that doesn't tell us the full story why PRTA makes a great buyout candidate.
Celgene (CELG) invested heavily into PRTA on March 20 with a $100 million upfront payment (the source of the accounts receivable) and $50 million share subscription at $42.57 per PRTA share. 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 liquid net asset 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.
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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