The Reddit investment community WallStreetBets or WSB has acquired a reputation as a major market mover following the GameStop (GME) short squeeze it drove in January. A unified approach accords Reddit investors the potential to gain significantly by squeezing short sellers out of their positions on fundamentally weak stocks. However, GME’s fundamental weaknesses have caused the short squeeze to be short lived. The stock has…
declined 2.8% over the past month.
Regarding the healthcare sector, the Health Care Select Sector SPDR ETF’s (XLV) 19.7% returns over the past six months reflect investor optimism about the sector’s growth prospects. However, the big rally by many of the sector’s stocks over the last year has come absent investors’ increased focus on the space. Rather, some fundamentally weak stocks have rallied thanks to WSB’s actions.
So, we think speculative biotech stocks Ocugen, Inc. (OCGN – Get Rating), Humanigen Inc. (HGEN – Get Rating), and 180 Life Sciences Corp. (ATNF – Get Rating) that are favorites of investors on Reddit forums are best avoided now.
OCGN is a clinical stage biopharmaceutical company that is focused on developing gene therapies to treat blindness. The company’s partnership with Bharat Biotech to develop COVAXIN as a vaccine candidate for COVID-19, which was announced in December, made the stock a big hit in the Reddit community. Reddit group pennystocks and RobinHoodPennyStocks have been betting on OCGN to gain in double digits in 2021.
Though initially developed to be supplied in both the United States and India, the jointly developed vaccine is currently being used to vaccinate the Indian subcontinent. While COVAXIN has proved to be 78% effective in protecting against the COVID-19 virus, it has yet to be distributed in the United States. The company plans to launch its vaccine in the U.S. soon. However, given the rapid pace of the mass vaccination program in the U.S. , the demand for COVAXIN in later months may be lean. Also, the high price of the vaccine in India, might lead to a low demand for it there too.
OCGN’s collaboration revenue for the year ended December 31, 2020 stood at $42,620. Its loss from operations increased 50.3% year-over-year to $21.28 million, while net loss rose 7.8% from the same period last year to $21.82 million. OCGN lost 31 cents per share during its fiscal year 2020. However, its shares have gained 3,671.7% over the past year, and 553.6% year-to-date.
A $0.37 consensus EPS estimate for the second quarter, ending June 2021, indicates a 294.7% improvement year-over-year. However, the company missed the Street’s EPS estimates in each of the trailing four quarters. Its revenues are expected to rise substantially from the prior year quarter to $78.10 million in its fiscal second quarter.
OCGN’s POWR Ratings are consistent with this bleak outlook. It has an overall D rating, which equates to Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with the weighting of each optimized to improve overall performance.
The stock has an F grade for Stability, and D for Momentum, Sentiment, and Quality. It is ranked #354 of 492 stocks in the F-rated Biotech industry.
In addition to the grades we’ve highlighted, one can check out OCGN Ratings for Growth and Value here.
HGEN made its stock market debut on September 18, 2020 through a public offering of eight million shares. It raised approximately $68 million in gross proceeds. The Reddit community has taken an interest in the stock due to its COVID-19 therapy drug lenzilumab. Positive results from the drug’s phase three clinical trials, announced on March 29, have attracted popular Reddit communities, such as Baystreetbets and WallStreetBets. In fact, one Reddit chat forum expects shares of HGEN to hit $120 in less than three months, according to a conversation thread posted on January 27.
HGEN has gained 348.7% over the past year to close yesterday’s trading session at $18.55. However, the stock has been…
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