Let’s take a second to discuss alternative, share value, and danger/reward concerns. These are a number of the elements buyers should contemplate when shifting into penny shares – and we haven’t even touched on the basic soundness of the corporate or its enterprise mannequin.
Penny shares – as their identify suggests, they as soon as traded for only a pennies per share, however nowadays are thought of these equities buying and selling at lower than $5 – are a difficult market area of interest. The penny inventory critics make legitimate factors when defending their stance. Sure, the value tag might appear to be a steal, however the truth that shares are buying and selling at such low ranges may replicate overwhelming headwinds or weak fundamentals.
That being mentioned, the followers supply up a strong argument as effectively. Not solely does the low value imply you get extra shares in your cash, however hefty returns are additionally on the desk. Even seemingly insignificant share value appreciation can lead to colossal proportion features that different extra well-known or costly names aren’t as possible to ship.
The nature of those investments presents considerably of a dilemma. How are buyers supposed to separate the penny shares which can be prepared to take off on an upward trajectory from these set to stay down within the dumps?
To assist with the due diligence course of, we used TipRanks’ database to zero in on solely the penny shares which have acquired bullish assist from the analyst group. We discovered two which can be backed by sufficient analysts to earn a “Strong Buy” consensus score. Not to point out every affords up large upside potential, as some analysts see them climbing to $10, or extra.
Aptinyx, Inc. (APTX)
We’ll begin with Aptinyx, an organization within the biopharma trade. Aptinyx works on the remedies for mind and nervous system issues, creating new artificial small molecule drugs for commercialization. The firm has a proprietary NMDA receptor modulator discovery platform, which permits a novel strategy to the focused issues.
Aptinyx’s analysis pipeline presently has three compounds within the scientific levels, all in Phase 2 trials. NYX-458 is a possible remedy for Parkinson’s illness and Lewy physique dementia, two critical central nervous situations of ageing. Preclinical and Phase 1 research confirmed sturdy exercise in rodent fashions and favorable security tolerance in human sufferers; the Phase 2 scientific trial will give attention to sufferers with gentle ranges of cognitive impairment and dementia.
NYX-783, the second compound within the pipeline, is being studied for its efficacy in treating post-traumatic stress dysfunction. A Phase 2 exploratory examine confirmed optimistic ends in symptom discount in simply four weeks of remedy, and the FDA has granted this drug a Fast Track designation.
Finally, NYX-2925, the lead drug candidate within the pipeline, is underneath examine as a remedy for 2 situations: fibromyalgia, and diabetic peripheral neuropathy (DPN). These are each continual, painful, situations, and NYX-2925 has demonstrated decreased ache ranges in sufferers throughout earlier stage testing. The DPN examine, like NYX-783 above, has FDA Fast Track designation.
Based on the potential of the corporate’s drug candidates, and its $2.84 share value, a number of members of the Street consider that now’s the time to get in on the motion.
Among the bulls is Leerink Analyst Mark Goodman who sees a string of catalysts forward to increase the inventory.
“The stock has been trending lower during the past several months mainly due to the lack of near-term catalysts, but we believe that investors will start to get much more focused on the name moving into 2H21 ahead of the multiple data points in 2022. We continue to have a positive view of Aptinyx’s focus on NMDA receptor modulators and its pipeline opportunities… Aptinyx has a strong drug discovery platform plus a library of >1,000 identified compounds, which should enable continued pipeline expansion and sustain long-term growth,” Goodman defined.
To this finish, Goodman charges APTX an Outperform (i.e. Buy) together with a $12 value goal. Investors could possibly be pocketing features of 324%, ought to Goodman’s thesis play out as anticipated. (To watch Goodman’s observe report, click here)
It’s not typically that the analysts all agree on a inventory, so when it does occur, take be aware. APTX’s Strong Buy consensus score relies on a unanimous 7 Buys. On prime of this, the common value goal is $10.67, suggesting sturdy development of ~277% from present ranges. (See APTX stock analysis on TipRanks)
Axcella Health (AXLA)
The subsequent penny inventory we’re taking a look at, Axcella, is one other biotech firm. Axcella is utilizing endogenous metabolic modulators (EMMs) as a jump-off to strategy new remedies for advanced illnesses, together with non-alcoholic steatohepatitis (NASH, or fatty liver illness), together with overt hepatic encephalopathy (OHE). These are each critical liver situations, and may have cascading penalties on the entire physique.
For each tracks, Axcella has accomplished early scientific research and is starting Phase 2 trials. AXA1125, the drug candidate underneath improvement to deal with NASH, began the EMMPACt Phase 2b scientific trial in May of this yr. The examine will enroll a complete of 270 sufferers, and can stratify them by the presence or absence of kind 2 diabetes, and essential complicating issue.
Also in May, Axcella introduced optimistic scientific information on AXA1665, the drug being studied as a remedy for OHE. The information confirmed that two totally different drug doses proved protected and well-tolerated, and confirmed optimistic outcomes when put next to placebo. Both AXA1665 and AXA1125 have had their IND utility cleared by the FDA.
AXLA’s robust pipeline has scored it substantial reward from Chardan analyst Keay Nakae.
“We view Axcella’s leading asset, AXA1665, as likely to exceed the benefits provided by the current standard of care therapies lactulose and rifaximin in HE, due to its clean safety/tolerability profile and ability to target more aspects of HE than simply blocking ammonia absorption in the gut. Beyond AXA1665, we also anticipate success for AXA1125 in NASH; the NASH market is crowded with potential therapeutics but is also a very large commercial opportunity that we anticipate will allow for the success of multiple market entrants. We expect AXA1125 to thrive as a base-level therapy due to its impressive safety/tolerability profile as a result of its mechanisms of action, with potential to move forward in pediatric NASH sooner than competitors due to this safety profile,” the 5-star analyst famous.
In line along with his optimistic strategy, Nakae provides AXLA shares a Buy score and his $10 value goal suggests ~186% potential upside for the approaching yr. (To watch Nakae’s observe report, click here.)
Other analysts are on the identical web page. With Three extra Buy rankings, the phrase on the Street is that AXLA is a Strong Buy. The shares are priced at $3.50, and the $11.25 common value goal suggests it has ~222% upside forward of it. (See AXLA stock analysis at TipRanks)
To discover good concepts for penny shares buying and selling at enticing valuations, go to TipRanks’ Best Stocks to Buy, a newly launched instrument that unites all of TipRanks’ fairness insights.
Disclaimer: The opinions expressed on this article are solely these of the featured analysts. The content material is meant to be used for informational functions solely. It is essential to do your personal evaluation earlier than making any funding.