Is Inovio Stock a Buy on Coronavirus Cure Potential?

INO has speculative potential but also fundamental risks…

This story was originally published here.

Inovio Pharmaceuticals (NASDAQ:INO) shares have been on fire. In fact, while the rest of the market is struggling as volatility surges higher, INO stock and a whole cohort of others continue to thrive. Why is that?

Many of these smaller biotech stocks continue to rip on hopes that they may have the cure or play a role in finding a vaccine for the coronavirus. As the virus continues to sweep across the globe, it’s wreaking havoc.

Some are in panic mode, as consumers (even in mostly unaffected areas) wipe out supplies. Look at this picture of a local Costco Wholesale (NASDAQ:COST) in Chicago to get an idea of it. And this is in a country where the virus has had very little impact (other than on the news).

I wouldn’t say it’s an overreaction, but the panic level is quite high. There’s been more than 3,000 deaths and 94,000 infections worldwide. As it spreads into other countries, it’s creating more concern amid global leaders. Companies are cancelling conferences and events, the Federal Reserve cut interest rates and Italy is considering closing schools.

INO stock surged 69% on Tuesday and is moving higher again on Wednesday, as investors hope that it may have an answer.

Trading INO Stock

Inovio has undergone a few major breakouts so far in 2020 — and no, it hasn’t been all due to the coronavirus.

Chart of INO stock
Source: Chart courtesy of StockCharts.com

Many investors likely think that INO stock has only been moving higher because of it. While it has certainly been the catalyst lately, it has not been the catalyst all year long. In January, Inovio surged up to the 200-week moving average but was quickly rejected from this mark. While that seems defeating, it wasn’t.

To get there, shares had to break out over long-term downtrend resistance (blue line). It was a bit dicey, but this mark mostly held as support when INO stock pulled back in the ensuing weeks. With its latest surge though, Inovio is officially breaking out over the 200-week moving average and clearing $6 in the process. Compare Brokers

Along the way, INO stock has held its 10-week moving average (green line) as bulls look for more upside. Now, look for this name to now hold up over the $6 mark and 200-week moving average. For bulls to be in control, we need to see these former resistance marks turn to support. If they can, it makes $10 a possible upside target, representing 33% upside from Tuesday’s close.

Inovio’s Outlook

So, what got the stock moving so much? On Tuesday the company announced an accelerated timeline for its INO-4800. That’s the company’s DNA vaccine for the latest string of coronavirus.

Human studies will launch next month here in the U.S., with tests in China and South Korea set for “soon thereafter.” From Dr. Joseph Kim, president and CEO:

We immediately began preclinical testing and small-scale manufacture and have already shared robust preclinical data with our public and private partners…We plan on delivering one million doses by year end with existing resources and capacity. However, we will need additional resources to scale up to make enough doses to help protect Americans from COVID-19 as well as to lead global efforts to curtail this virus.

If Inovio ends up being the go-to solution for coronavirus, it could be a serious catalyst for its business. That’s of course assuming Inovio is the one to lead the charge and not a company like Gilead Sciences (NASDAQ:GILD).

“Existing resources and capacity” will be enough for one million doses. That’s about 10 times the total infection count recorded thus far. While Inovio has the balance sheet to survive on its own, for now, it is not profitable or free cash flow positive.

Keep an eye on this one going forward. Over $6 and the bulls are still in control. Below and the situation gets a bit more iffy.

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