The COVID-19 vaccine market was fading as economies began to recover. However, the insurgence of new coronavirus cases and deaths is causing investors to gravitate towards COVID-19 vaccine frontrunners Moderna (NASDAQ: MRNA), Novavax (NASDAQ: NVAX), and Inovio Pharmaceuticals (NASDAQ: INO). It makes logical sense that investors rally behind the vaccine companies. Especially as they have become like safe havens in this turbulent climate. While all companies hold growth potential, INO stole the spotlight yesterday with highly price-sensitive news regarding the COVID-19 vaccine funding . Now more people are swimming in the INO pool. However, investors are wondering how high can the INO stock go?
Table of contents 1. What does the $71 million in funding mean for investors? 2. Are hedge funds bullish on INO? 3. How high can the INO stock go?
Government funding causes the INO stock to surge 40%
In hindsight, Inovio was a blip on the vaccine market when it only traded at $2 a share. However, after relentless research and $9 million in funding from the Coalition for Epidemic Preparedness Innovation (CEPI), INO developed a potential vaccine and is currently undergoing human trials.
Yesterday INO announced that the U.S Department of Defense (DOD) is providing $71 million funding. The supply deal will allow INO to ramp up the production of their vaccine delivery devices. According to Inovio its AA battery charged vaccine devices “function reliably in challenging environments.” Reliability and efficiency are some of the most critical qualities of a vaccine in responding to an extremely high number of COVID-19 cases. It seems Inovio, is now a signifcant red signal on the vaccine market radar. Especially as investors reacted to yesterday’s vaccine contract with extreme optimism, rallying INO up 40% in a day. However, investors who sitting in the fence are wondering how high the INO stock can go?
What do the analysts say on the INO stock?
Understanding the viewpoints of hedge funds and billionaire investors on INO reduces your research and highlights the future direction of the herd. According to Insider Monkey, eight hedge funds held a long position in Inovio in Q3 2020, which is a 60% increase from Q2 2020. The most significant hedge fund managers amongst the bullish pack include Millennium Management, Citadel Investment, and Balyasny Asset Management. Millennium is leading the charge with a $12.6 million stake in INO. Second place goes to Citadel management who have accumulated a position valued at $6.5 million. Thus, the overall consensus of hedge funds on INO is bullish. Consequently, many investors will join hands with the hedge funds and be bullish on INO too (‘Sheep Factor’) (opinion not advice).
Is the INO stock the best COVID-19 investment?
Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research into this area.
Disclaimer: I own shares in Inovio Pharmaceuticals (NASDAQ: INO)
Short answer: Yes, but if you don’t own shares do not jump in straight away
Let’s breakdown the investment into three categories: technical chart analysis, the faith of the DOD, the likelihood of a viable vaccine.
Technical Chart Analysis
Yesterday’s monstrous growth marked INO’s breakout from its relatively flat-slow rise over the past few weeks. The rally created new levels of resistance around the $19-$19.50 (opinion not advice), which is significantly higher than last weeks resistance of $13.50-$14. Overall, higher resistance levels and the rising 50-day moving average signifies a bullish direction for the future of the INO stock (opinion not advice).
Department of Defense confidence
Furthermore, the injection of confidence from the Department of Defense paints a promising future for INO. It seemed that in the early stages of COVID that every biotech and his dog was receiving funding and coverage. However, as the virus continues, the U.S is investing more capital in the vaccine frontrunners like Moderna, Novavax and Inovio. Thus, we should see more funding flow to these companies, because they have the best shot at developing a viable vaccine.
INO and the vaccine competition
Lastly, the million-dollar question is which frontrunner will cross the vaccine line first. In the case of INO they hold a potential candidate that can be administered via a double AA battery device. The readiness, efficiency, and ease at which the device can be scaled up is the main differential between INO and the other vaccine frontunners. Ultimately attracting investors and governments alike because reliable administration is what you look for when vaccinating a mass amount of people. Thus, all signs point towards strong growth in a possible INO investment (opinion not advice). However, always remember to make an investment that reflects your financial needs and not the needs of the media, hedge funds, or other financial institutions.
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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Written by Patrick McLoughlin, Senior Manager of YIG.