ANAVEX LIFE SCIENCES (OTCMKTS:AVXLD) witnessed a sharp pullback last Tuesday after registering strong gains in the preceding week. Despite the 10% decline on Tuesday, the stock is still up over 30% since October 7, 2015. The rally in Anavex stock started after the company reported a reverse stock split and its plan to uplist to the NASDAQ platform.
The details
The up listing of Anavex stock on the NASDAQ exchange will be a major achievement for company. It will improve the stock’s visibility and also enable company to attract institutional investors. The other major forthcoming catalyst for AVXLD stock will be the release of top line results for Part-A of the Phase 2-a study of Anavex 2-73 in Alzheimer’s. The report is anticipated to be released by this year’s end. Anavex has completed enrollment for the study ahead of the schedule.
Now what?
Here the major concern is whether after the recent rally, is it wise to invest in Anavex stock. As per an article published on Seeking Alpha, the fair value of Anavex stock is $20 per share after recording necessary adjustments of the reverse stock split process. It should be noted that the fair value reported is based on a lower share number whereas as of now the number of outstanding shares have nearly doubled. Considering the new share count, the fair value comes around $10. With the AVXLD stock closing at $9.14 yesterday, this suggests an upside of nearly 10% and thus, the current levels do not appear to be an attractive entry point.
The fair value of $10 is based on odds of approval of mere 35%. As company’s lead drug Anavex 2-73 moves in clinical stages, the chances of approval will get better, which will have a positive impact on the fair value. The pullback of Anavex stock to $8 appears to be a better entry point for investors.
ANAVEX LIFE SCIENCES (OTCMKTS:AVXLD) has been in a strong uptrend over the last couple of months. The stock has been forming higher highs and higher lows which is indicative of the strong buying interest for the stock. The relative strength index for the stock has given a fresh buy signal which is pointing towards inherent strength and is considered to be a bullish sign. Traders believe the stock could head to levels of $10.01 in the near term. The stock currently trades above all important daily moving averages which is indicative of the fact that bulls are in total control.
