In last trading session, the stock price of ANAVEX LIFE SCIENCES (OTCMKTS:AVXLD) declined more than 1% to close the day at $9.02. At a time, when the stock has gained more than 1000% already in 2015, it is important to analyze if there is more steam left in the stock? The unbridled enthusiasm warrants a reality assessment for investors interested in this biotech firm.
The highlights
Anavex was established through a reverse merger of a photofinishing firm into a BioPharma entity orchestrated by a long-time company’s executive and career penny stock scammer. Moreover Alzheimer’s studies boast a 99.6% failure rate and in fact there have been no drug approvals since 2001, making the company’s interim results on twelve patients lacking a appropriate endpoint not extremely useful. Considering these factors, Anavex looks pretty overvalued after over 1000% gains so far in the year, making it a sell target at the current rich valuation.
The query
Here, the main question is are the investors and market being wise believing that an official with a history of poorly performing penny stocks in oil and gas sector performed a reverse merger to turn a photofinishing shell firm into a drug developer firm that acquired three patents and now possess new standard of treatment for Alzheimer’s in the midst of advancement in an indication with almost 99 failure rate where no new therapies have been permitted since 2003?
Investors are not finding it important to consider the reality of Anavex. They should realize that Anavex is now a biotech firm with a market cap of almost 285 million and not a $50 million firm. So, it would be wise for investors to stock with the initial price targets and not raise their expectations. This process of continually looking to increase hopes can be fatal, as bears make profit, bulls make profit but pigs get slaughtered.
ANAVEX LIFE SCIENCES (OTCMKTS:AVXLD) suffered from a very small correction yesterday as it ended the last trading session with a minor loss of 1.31%. The volume of the day at 650,000 was much lower than the daily average of 1 million, reflecting the corrective nature of the price action. The form of the daily candle took the shape of a Bullish Hammer at the end of the day, indicating buying at the lower levels. That goes perfectly with the long term uptrend of the stock, as evident from the perfectly maintained long term channel containing the entire uptrend, as shown on the chart attached.
