The Short-Sellers May Be Right About This Red-Hot Pharma Stock

Palvella Therapeutics (PVLA) is a clinical-stage biopharma stock with no revenue or FDA pipeline.
However, the stock has exceptional price momentum with shares up 508% over the past year.
PVLA is trading at a new 2-year high and has strong technical indicators.
Palvella is highly speculative. It is suitable for traders, not long-term investors, due to its extreme volatility and lack of fundamentals.

Author’s Note: Remember these articles are entitled “Chart of the Day.” I'm featuring this company for its chart, not its fundamentals, of which there are none. Make sure you read my conclusion at the end of this newsletter.

Today’s Featured Stock

Valued at $1.11 billion, Palvella Therapeutics (PVLA) is a clinical-stage biopharmaceutical company focused on developing and commercializing novel therapies to treat patients suffering from serious, rare genetic skin diseases.

More Top Stocks Daily: Go behind Wall Street’s hottest headlines with Barchart’s Active Investor newsletter.

What I’m Watching

I found today’s Chart of the Day by using Barchart’s powerful screening functions to sort for stocks with the highest technical buy signals; superior current momentum in both strength and direction; and a Trend Seeker “buy” signal. I then used Barchart’s Flipcharts feature to review the charts for consistent price appreciation. PVLA checks those boxes. Since the Trend Seeker signaled a new “Buy” on July 9, the stock has gained 295.85%.

Barchart Technical Indicators for Palvella Therapeutics

Editor’s Note: The technical indicators below are updated live during the session every 20 minutes and can therefore change each day as the market fluctuates. The indicator numbers shown below therefore may not match what you see live on the Barchart.com website when you read this report. These technical indicators form the Barchart Opinion on a particular stock.

Palvella hit a 2-year of $103 in morning trading on Nov. 24.

PVLA has a Weighted Alpha of +559.87.
Palvella has a 100% “Buy” opinion from Barchart.
The stock gained 508.83% over the past year.
PVLA has its Trend Seeker “Buy” signal intact.
The stock recently traded at $102.76 with a 50-day moving average of $72.97.
Palvella has made 11 new highs and gained 39.9% in the last month.
Relative Strength Index (RSI) is at 73.22
There’s a technical support level around $90.92.

Don’t Forget the Fundamentals

$1.11 billion market capitalization.
There are no further fundamentals to review.

Analyst and Investor Sentiment on Palvella Therapeutics

I don’t buy stocks because everyone else is buying, but I do realize that if major firms and investors are dumping stock, it’s hard to make money swimming against the tide.

It looks like Wall Street forecasts pie in the sky, but individual investors are not interested in this stock.

The Wall Street analysts tracked by Barchart have issued 12 “Strong Buys” and 1 “Hold” opinion on the stock with price targets between $50 and $200 – an extra-wide range.
Value Line does not rate this stock.
CFRA’s MarketScope Advisor rates it a “Hold” which you could interpret to mean keep it if you bought at a lower price, but don't buy any new shares.
Morningstar thinks with the stock’s recent runup, it’s 32% overvalued.
The 1 investor following PVLA on Motley Fool thinks it will beat the market.
276 investors monitor the stock on Seeking Alpha, which does not rate the stock.
The most interesting opinion is from the short sellers who have shorted 8.55% of outstanding shares.

The Bottom Line on Palvella Therapeutics

Again, we have a pharma company which has no revenue and no products in the FDA approval pipeline, so why the price momentum?

This stock’s momentum seems to be driven by cap-weight ETFs. When it debuted on Wall Street, total market ETFs bought in, driving up prices in the secondary market. As the price rose, the broad market ETFs like those that track the Russell 3000 and now the Russell 2000, and so on, have bought in. Watch to see if the short interest keeps growing. Wall Street is betting long, but the shorts may be right.

PVLA is for speculators, not investors.

Today’s Chart of the Day was written by Jim Van Meerten. Read previous editions of the daily newsletter here.

Additional disclosure: The Barchart of the Day highlights stocks that are experiencing exceptional current price appreciation. They are not intended to be buy recommendations as these stocks are extremely volatile and speculative. Should you decide to add one of these stocks to your investment portfolio it is highly suggested you follow a predetermined diversification and moving stop loss discipline that is consistent with your personal investment risk tolerance.

On the date of publication, Jim Van Meerten did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

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