Fundamentally and technically, it’s been a strong 2016 for Innovus Pharmaceuticals (OTCQB: INNV). As shown in the chart below, shares ended 2015 at 7 cents. Much like the broad markets, it was tough sledding at the start of the year, including a dip to a 52-week low of 2.8 cents for INNV. As it happens, the one-year low attracted buyers, catalyzing a new uptrend.
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After lumbering around the nickel mark, shares began a regular pattern of higher highs and higher lows, including hitting 20 cents in April, 37 cents in May and a new 52-week high at 66 cents on July 26. Actually, 66 cents was the highest price for the stock since March 14, 2014.
With that type of a run – a bottom to top climb of 2,257% – some profit taking is expected and that is what has happened in the past two months as shares look to find a new support point and attract buyers again. Shares closed on Wednesday at 26 cents, a level that served as resistance in June and July and then, in classic technical analysis fashion once the resistance was broken, turned into support in August and September. Technical traders will be watching for some upward pressure to come off the support point as a signal the uptrend is ready to continue.
Beneath that, there is more technical support at 20 cents. That is also the area of INNV’s 200 day moving average, a key indicator technicians look to for charts to bounce off of.
In order for INNV to keep the pattern of higher highs going, it must break some resistance. The first strong case is 46% ahead, around 38 cents, which is not only the area of the 50 day moving average, but also a static resistance point from May and earlier this month. After that, INNV will likely see some headwinds at 50 cents before looking to make a new multi-year high and logging a gain of more than 154% from current levels by rising over 66 cents.
Technicals and fundamentals often go hand-in-hand and that’s the case with Innovus. The rise in valuation has been the product of the company entering its third year of generating revenues, while expanding its portfolio of consumer products for men’s and women’s health and vitality. As it stands, Innovus has a bag with 13 commercialized products with another, FlutiCare™ OTC for Allergic Rhinitis, at the FDA seeking approval of an abbreviated new drug application.
With the launch of new products recently, new CFO Robert Hoffman has stated that a main goal of Innovus is to reach $5 million in revenue for the full year and $15 million in sales during 2017. Hoffman, who has long history of success as part of the founding management team at Arena Pharmaceuticals (NASDAQ: ARNA) and a current board member at CombiMatrix (NASDAQ: CBMX), Kura Oncology (NASDAQ: KURA and MabVax (NASDAQ: MBVX), further believes Innovus can reach profitability next year.
Innovus Pharmaceuticals plans to launch several new products using the Beyond Human direct sales and marketing platform over the coming quarters. These new product launches could be catalysts for the stock, and have not been factored in to the $5 million revenue projection for 2016. The big one is the potential FDA approval of the Fluticare™ product, which could happen at any time. Innovus has all of the manufacturing and distribution channels set up, ready to hit the ground running if approved.
SeeThruEquity raised its price target for Innovus Pharma to $1.00 per share on August 15 in a research update, citing the company’s recent results and guidance.
According to the analyst report:
“In light of results and guidance that were ahead of our expectations we are raising our target for Innovus to $1.00. We see Innovus as a high-risk / high-reward investment opportunity in the OTC pharmaceuticals space with a differentiated business model focused on men and women’s health and vitality.”
Still, when considering that Innovus estimates the immediate market for its newly launched RecalMax™ could be worth about $3 billion, the company is clearly keeping their expectations in check with revenue forecasts in the line of $5 million. The convergence of fundamentals and technicals has become slightly disjointed with the recent pullback taking Innovus’ market capitalization to only $25 million. It’s not terribly surprising as pullbacks often get a little overcooked, but it will be equally unsurprising to see a correction off the technical support.