IPOC closes in on merger with Clover Health – now what?

Social Capital Hedosophia (NYSE: IPOC) are set to close in on their merger with Clover Health in early 2021. Evidently, this has caused a strong upswing in investor momentum in IPOC’s trading price. IPOC has gained 33% over the past week of trading and 66% for the month of December. The Special Purpose Acquisition Company (SPAC), IPOC is founded by billionaire Chamath Palihapitiya who has large plans for the healthcare company Clover. Furthermore, Chamath plans to bring strong returns for investors in years to come. With so much hype surrounding the merger and the next chapter of Clover Health, this article will breakdown everything you need to know.

Key details surrounding the merger

Firstly, the merger will finalise on the 8th of January when both companies will trade under the new ticker NASDAQ:CLOV. The transaction has an enterprise value of $3.7 Billion, which will provide $1.2 Billion in cash proceeds. Furthermore, Clover Health will receive $728 million of cash injections into the business. The additional $500 million of cash proceeds will be allocated to existing Clover shareholders. The merger aims to tap into the Medicare advantage market set to be worth $590 billion by 2025.

“We need companies like Clover to help fix our broken healthcare system. The Company’s rapid growth is a testament to the effectiveness of its tech-enabled approach, which resonates powerfully with consumers and physicians alike. I believe Clover is uniquely positioned to disrupt the entire Medicare Advantage market as well as expand into new and exciting opportunities in Original Medicare. I am proud to partner with Vivek, Andrew and the entire Clover team on the next phase of their mission to improve lives across the country.”

Chamath Palihapitiya, Founder of IPOC on merger announcement.
Conceptual business illustration with the words special-purpose acquisition company

What to expect from CLOV stock in 2021?

Clover Health is set to debut on Wallstreet on Friday the 8th of January. The debut will mark a new chapter for the healthcare innovator, especially with a healthy injection of cash into the business. Clover is the fastest growing Medicare Advantage insurer in the United States. The company serves more than 57,000 members in 34 counties and 7 states. Furthermore, with the strong revenue growth forecasted for 2021, it is clear why investors have jumped on board.

Revenue performance and forecasts for 2021

According to Woori BMO Group’s Head of Institutional Equity, Andrew Williams, Clover Health generated $462 million in revenue in 2019, an increase of 59% from 2018. According to Yahoo finance, the company is projecting revenues of $880 million with over 273,000 members in 2021. The most outstanding figure is the increase in members from what it stands today at 57,000.

The risks associated with SPAC pricing

As we have seen throughout 2020, more than a dozen popular SPAC’s have listed/merged their chosen companies on Wallstreet. The hype surrounding these high growth companies has seen extreme volatility reflecting in the share price, especially after the public listing. Investors in IPOC will need to remember that PIPE investors alongside some speculators will tend to sell their holdings after listing. The after listing volatility is something investors will need to evaluate and price into their risk strategy.

Summary

I am obliged to remind our viewers that this article is not financial advice but rather investment commentary from extensive research.

In conclusion, the merger set to conclude on the 8th of January is shifting investor sentiment for all the right reasons. The strong cash injection, industry growth and strong revenue forecasts are all strong signs for Clover Health moving forward. However, its important for investors to understand the volatility brought upon SPAC listed companies after listing. For long term shareholders, this will only create a buying opportunity in their opinion.

Written by Tyger Fitzpatrick, Founder of Youth Investment Group.

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Moderna and Novavax surge ahead of 2021 – here’s what you need to know

The past two weeks have seen a large shift in investor sentiment towards these two key COVID vaccine pioneers. Moderna Inc (NASDAQ: MRNA) and Novavax, Inc. (NASDAQ: NVAX) have seen a recent surge in the share price. The companies saw an increase of 26.52% (NVAX) and 38.26% (MRNA) respectively over the past week of trading. The vaccine industry is becoming increasingly volatile, with Phase 3 Efficacy trials being released. This article will breakdown everything investors need to know about Novavax and Moderna stock moving into 2021.

What are analysts saying about Moderna and Novavax stock?

With the COVID vaccine industry moving closer to the distribution phase, Moderna and Novavax have entered the spotlight on Wallstreet. Here’s what analysts are saying about both vaccine developers.

Moderna

The 12 month price targets for Moderna average at $109 across the board of 19 Wallstreet analysts. This represents a downside of 28% from its current trading price. The general consensus amongst analysts averages a buy rating, with 2 sell ratings and 4 hold. Moderna has recently received price target boosts from multiple institutions, driving the stock price into a territory.

  • 12/3/2020 Bank of America – analysts at BoA boosted their 12 month price target from $105 to $150 a share. The market reacted in favour of this price increase moving the stock above the $150 bench mark.
  • 12/1/2020 Argus – analysts at Argus increased their 12 month price target astronomically, from $88 to $200 a share. Argus also changed their rating from a hold to a buy. Investors are confident this bullish target suggests Moderna still has further room to grow moving into 2020
  • 11/30/2020 Wells Fargo & Company – boost in price target from $92 to $129 a share. The company holds an equal weight rating for Moderna stock.
  • 11/25/2020 The Goldman Sachs Group – analysts increased their price target from $107 to $139 a share. Although this suggests a downside on the current price, it is clear Goldman Sachs are maintening a bullish stance on the company

Novavax

Novavax unlike Moderna, is yet to release their Phase 3 efficacy results for their COVID 19 trials. The company is known by the investor community to be supported by Billionaire Bill Gates. Here’s what analysts are saying about Novavax stock.

11/17/2020 HC Wainwright – analysts lowered their price target from $290 to $207 a share. The lower price target still maintains a buy rating and exposes upside potential of 80%+ from the current trading price.

10/22/2020 B.Riley – analysts increased the price target from $223 to $257 a share. This remains NVAX second highest price target behind JP Morgan.

8/5/2020 JP Morgan Chase & Co – analysts at JP Morgan remain the strong bulls supporting the share price. Analysts increased the 12 month price target from $105 to $275 a share. The company also increased NVAX rating to overweight suggesting it will strive within the industries it operates.

What to expect moving into 2021?

Both companies have proven to be some of the key players in the COVID vaccine race. Futhermore, investors have heavily backed both of these companies moving into 2021.

Moderna’s outlook for 2021

  • Submitted data from the Phase 3 trials assisting in the approval process with regulators around the world (US, Europe and UK). This should allow for the emergency use/license of the vaccine. 
  • Final results gained from the trials of Moderna’ vaccine against COVID-19 confirm 94% efficacy (effectiveness) 

Moderna said it has an expected 20 million doses of its vaccine ready for use in the US by the end of 2020. The US entered an agreement to purchase 100 million doses whilst also having an option to purchase an additional 400 million. Moderna’s extensive reach across multiple continents does shine light on its potential moving into 2021. The potential products in clinical development have the potential to have combined estimated sales of $77.1 billion by 2030 according to NASDAQ source.

Furthermore, the company also received $2.48 Billion US federal funds due to trumps administrations ‘Operation warp speed’. Operation Warp Speed’s goal is to produce and deliver 300 million doses of safe and effective vaccines with the initial doses available by January 2021.

Novax outlook for 2021

  • Pivotal Phase 3 trial in United Kingdom has recently completed enrollment as well as the Phase 2b efficacy trial in South Africa. US/Mexico Phase 3 trial expected to begin in the coming weeks.
  • NVAX has also been granted fast track approval by the FDA and has entered an engagement with the Commonwealth of Australia to supply 40 million doses of the vaccine. This extends its reach in the supply of their vaccine, in similar fashion to Moderna.

The 2021 revenue forecasts are expected to increase 181% year on year, from $971 million in 2020 and $2.73 Billion in 2021. This spike in the revenue forecast has a priced in resultant surge in demand from the COVID vaccine. These are impressive improvements for NVAX in comparison to its 2018-2019 results.

“Novavax is in a leading position to significantly contribute to the need for safe and efficacious vaccines that will ultimately end the worldwide COVID-19 pandemic.. We continue to make meaningful progress as we work to test, manufacture and ultimately deliver NVX-CoV2373 with unprecedented speed, as well as put partnerships in place that would ensure widespread and equitable access worldwide.”

said Stanley C. Erck, President and Chief Executive Officer, Novavax.

Summary

I am obliged to remind our viewers that this article is not financial advice but rather investment commentary from extensive research.

In conclusion, both companies have a strong path to victory moving into 2021. Analysts on both companies have shown bullish tones in the past few weeks. However NVAX holds a higher price target on average (data skewed). The outlook for Moderna holds more imminent momentum with investors peeled on any news relating to emergency use of the vaccine. NVAX are yet to release their Phase 3 efficacy data, which has placed them on the back foot for now. Both companies as suggested by their investor interest hold weight moving into 2021, however the risk with COVID-19 vaccine companies should always be priced in (opinion not advice).

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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.

Novavax stock forecast for 2021 – is $200 realistic?

Novavax, Inc.(NASDAQ: NVAX) has seen an incredible year in stock price growth, increasing 1,1711.50% YTD. The companies COVID-19 vaccine saw the market rally behind NVAX, posting a 52 week high in August of $189.40. The company announced yesterday an agreement of principle with the Commonwealth of Australia for Acquisition of 40 million doses of NVX-CoV2373. The companies share price rallied upon this new found agreement which poses further questions for investors moving into 2021. This article will breakdown analysts forecasts and our take on the Novavax stock 2021 forecast.

What are analysts forecasting for NVAX stock?

According to NASDAQ data, the 12 month price targets set by 5 analysts suggest an average price of $207.25. This suggests an upside potential of 132% over the next 12 months. The more bullish price targets suggest targets as high as $290 (225% upside potential) and more conservative targets at $105 (upside of 17%). These targets are good signs for investors as even the lowest quartile of price targets remain above the current price.To summarise what this means for investors, analysts are suggesting NVAX has room to grow over the next 12 months.

To put these targets into perspective, our article in August this year noted the average price target from analysts was $132. This is a 56% increase in average price forecasts in the space of 3 months. The bullish sentiment continues to build for Novavax as they edge closer to the results of the Phase 3 trials.

The institutions have weighed in

The more noteworthy analysts who have weighed in on the COVID-19 vaccine contender are JP Morgan Chase, Cantor Fitzgerald, Ladenburg and HC Wainwright. On the 5th of September JP Morgan had upgraded the stock status to overweight and updating their 12 month price target to $275 from $105. Interestingly, on the same day Ladenburg had downgraded the stock to a sell rating and a price target of $105. This had left investors torn between both ratings and what they meant for the stock price.

What are the revenue forecasts for Novavax stock?

Firstly, the revenue forecasts for Novavax moving into 2021 are very strong. The 2021 revenue forecasts are expected to increase 181% year on year, from $971 million in 2020 and $2.73 Billion in 2021. The lower end forecasts suggesting $1.4 Billion revenue in 2021 and higher quartile estimates closing on $4 Billion. These are impressive improvements for NVAX in comparison to its 2018-2019 results.

These positive forecasts are driven by the companies impeccable positioning to be one of the first to market a FDA approved COVID-19 vaccine to the world. However it’s worth noting these forecasts will continue to change as we move closer to 2021. As we know, the COVID-19 vaccine industry on wall street remains one of the more volatile. This is the risk investors take when entering the newly founded COVID-19 vaccine sub-market.

What are the bears saying about NVAX?

To begin with, Novavax stock forecasts from analysts definitely illuminate the long term potential the company holds for capitalisation. However, after research the COVID vaccine since inception, investors need to understand what data driven volatility means and how it effects the stock price. Firstly, data driven volatility is the market behaviour experienced when certain trial data is expected to be released. Speculation is the key driver of this and is why the COVID vaccine market is so attractive (risk reward).

Although investors see security in NanoFlu if the COVID vaccine fails to reach finalisation, the stock could take a tremendous fall upon any negative related vaccine data. The bears argue that the speculation and “perceived positioning” of the company has inflated Novavax’s stock forecasts. This is the calculated risk associated when entering a data driven volatility.

Summary

Before I begin, I am obliged to remind our viewers that this article is not financial advice but rather investment commentary from extensive research.

In conclusion, the forecasts provided from analysts maintain their bullish venom. Next year will be key for Novavax’s future, especially if they can secure success in the Phase 3 trials. Positive Phase 3 data will secure 40 million doses to be sent to Australia alone, not to mention the 60 million to the UK. This is one of my key stocks to watch as we move into 2021.

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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.

iBio’s stock forecast for 2021 and beyond

iBio inc. (NYSE:IBIO) rose to popularity amongst the investor community as they announced their intentions to develop a COVID-19 vaccine. The stock is currently trading 586% higher since the beginning of 2020. However since July, iBio stock has been on a downward slope which has since found a new equilibrium at $2. The initial announcement of collaboration with Beijing CC-Pharming, led by Dr. Kevin Wang and iBio’s Dr. Sylvain Marcel saw investors rally. However as speculators fled to leading vaccine competitors such as Novavax and Moderna, it left questions on the long term sustainability of iBio stock. So let’s breakdown the forecasts for iBio moving into 2021 and beyond.

What is smart money saying about iBio stock?

The forecasts by analysts for iBio are limited with WSJ data suggesting only one 12 month price target at $3.10. NASDAQ data also only has one analyst 12 month price target at $6.65. This suggests an upside potential of 46% and 213% from the current price today respectively. With only 2 price targets available from analysts, the validity of these targets is skewed.

Institutional holdings or “smart money” can give us a good understanding in regards to how analysts view iBio as an investment. The institutions currently holding iBio stock include The Bank of America, Morgan Stanley, Charles Schwab Investment Management and Wells Fargo. The Bank of America and Morgan Stanley hold smaller stake in iBio while Charles Schwab and Wells Fargo hold a larger investment. To see the full list of institutions holding iBio, click here.

There is little to no revenue guidance for iBio moving into 2021 and beyond. With the main focus on the COVID-19 vaccine, the fundamentals don’t really add up for institutions. As iBio is one of the more affordable COVID-19 vaccine opportunities for investors, it is easy to see why it is so popular amongst the retail community. iBio is not likely to be first to obtain a clinically tested COVID-19 vaccine. However, it is almost certain there will be multiple COVID vaccines on the market by 2021. Therefore, there is still a lot of room for growth at $2.10 (opinion not advice).

Breakdown on iBio’s vaccine blueprint

The secret weapon for iBio is its manufacturing capabilities. Built in 2010, the Defence Advanced Research Projects Agency (DARPA) under the wing of the US Department of Defense aided iBio in building a “FastPharming Facility” . This would facilitate the manufacturing of vaccines quickly in the case of a Global Crisis. This funding was apart of the “Blue Angel” initiative. See our full article on FastPharming here.

This was a huge advantage initially for iBio stock and its investors. However the delay in advancing to beginning a Phase 1trial has left investors second guessing the companies future. We have seen multiple vaccine leaders delay the progression of their Phase 3 trial. This suggests the first vaccine of the market won’t be available till 2021 (A good sign for iBio investors).

Summary

Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.

To summarise iBio’s current position as well as looking forward into 2021, it is clear the Pharma won’t be the first to release a COVID-19 vaccine. However, the demand for multiple COVID vaccines through 2021 and beyond gives hope to long term iBio investors. With little revenue and price target guidance, all eyes are on iBio to release further updates on the commencement of a Phase 1 trial.

The skewed forecasts for iBio suggest a great deal of speculation surrounding its vaccine and its competitors. Currently priced at $2.10 the stock is likely to skyrocket if iBio release a statement surrounding the Phase 1 trial (opinion not advice). However, until then the long term future of iBio stock remains up for debate with speculators.

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The information above should not be taken as 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.

SRNE stock forecast indicates a bullish 2021 – is it real or COVID-19 hype?

Sorrento Therapeutics (NASDAQ: SRNE) was lacking direction as short-sellers brought down the stock after most positive announcements. However, the green light from the FDA allows the bulls to lay down the trackwork. The clear path is promising, but the volatility is making it difficult for investors to enter. Today’s article looks to make sense of the volatility and to breakdown the SRNE stock forecast for 2021.

Table of contents 

1. Why all the hype? 

2. Smart money is bullish. 

3. Is there doubt?

Why is the SRNE stock forecast suddenly bullish?

Sorrento’s positive Cancer and COVID-19 drug developments are attracting bullish investors.

COVID-19 Update

On the 17th of September, the FDA gave SRNE the green light to commence Phase I COVID-19 clinical trials. The FDA’s vote of confidence comes from Sorrento’s positive pre-clinical trial data. Despite the announcement being last week, the increase in media coverage saw trading volume spike this week.

Moreover, SRNE expects STI-1499 to receive an Emergency Use Authorisation (EUA) potentially. While a EUA is still wishful thinking Sorrento initiated, “cGMP manufacturing to produce 50,000 doses in anticipation of the approval”. Sorrento intends to submit a EUA application as early as before the end of 2020. A potential approval likely saw investors buy shares under FOMO. However, investors should not translate a submission as a guarantee.

Cancer Treatment Update

SRNE’s positive Phase 1B cancer results are making investors optimistic about future catalysts. Sorrento reported on Tuesday that a “majority of their patients suffering from intractable pain reported a meaningful pain reduction of 30% or more from baseline”.

Phase I trial results usually do not trigger bullish activity. Because they are a relatively easy hurdle to overcome. However, the market potential of cancer can make Phase I trial results a bullish catalyst. Hence, the 17% rally on Tuesday.

However, the Phase I results is not the real reason for the rally. Sorrento intends to file a Phase 3 trial application to the FDA “imminently”. A phase 3 trial for Cancer is a huge catalyst.

Options and analysts project a bullish future – overly optimistic or accurate?

Implied volatility and the comparison of put to call volume can indicate the underlying sentiment. In the case of Sorento, Implied volatility is ranging between 140-540%, which is incredibly high. When Implied Volatility gaps up it usually suggest a big swing to the downside or upside is imminent. Considering SRNE holds bullish catalysts under its belt we could see the price move to the upside.

Furthermore, Analysts Dawson James and H.C Wainwright are leading the bullish charge. Both analysts rate Sorrento as a buy with the respective 12-month price targets of $24 and $30. It is still uncertain whether SRNE will reach the respective prices of $24 or $30 in 2021. However, it is fair to say that the sentiment is bullish. Because H.C Wainwright and James both held their buy rating ratings since May and raised their price targets this quarter.

Opposition to the bullish SRNE stock forecast

The two most significant rebuttals are poor trial results and investors overreaching. It is important to note that the incredibly bullish activity is factoring in favourable trial results. Phase 3 trial results and an FDA approved COVID-19 drug is no easy feat. Analysts and options make it seem that SRNE is poised for success. However, setting stop losses to avoid a potential fallout is essential.

Summary

Overall Sorrento holds a bullish outlook for two reasons. First, the vote of confidence from the FDA makes SRNE a potential COVID-19 treatment frontrunner. A COVID-19 vaccine is still two or more quarters away. Hence, the FDA green light is a major win. Because if SRNE receives approval than they will act as a symbol of hope in the meantime. Second, the positive phase 1B cancer trial results bolstered Sorrento’s drug pipeline. Essentially, the cancer progression de-risks the investment (opinion not advice). Because investors are not just riding on COVID-19 hopes.

These two fundamental changes are why options activity and analysts are bullish. Overall, all signs are pointing towards a bullish future for SRNE heading into 2021. However, if Sorrento fails to achieve future milestones, then the short-sellers will tear down the gains in a heartbeat.

If you enjoy our article or are wanting to learn more, you can subscribe to us by turning on notifications to get updates when we post a new article. From all of us at YIG, thank you for the support.

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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.

Written by Patrick McLoughlin, Senior Manager of YIG.

CVS stock forecast 2021 – will the healthcare giant bounce back?

CVS Health (NASDAQ: CVS) stock has been going on a rollercoaster ride in 2020 so far. The start of the year was promising as the healthcare giant hit 52-week highs. Unfortunately, COVID-19 sent CVS spiraling down. Investors are currently unsure what is in store for CVS come 2021 and beyond. Especially, as the CVS stock forecast is met with strong bullish and bearish arguments. Thus today’s article will walk our readers through the bullish and bearish forecasts for CVS.

 

Table of contents 
1. Bullish case 
2. Bearish rebuttal 
3. Summary 2021-2024 forecast

 

CVS stock forecast 2021 – bullish argument

Financials

CVS’s financial strength lies in historical earnings and revenue growth, positive dividend forecasts, and the ability to service debt.

Investors began pouring money into CVS ever since they began driving revenue growth in 2019. Mainly because the insurgence of more revenue saw CVS turn red into green earnings. Analysts are projecting linear growth for CVS’s revenue from now, $260 billion, to 2024, $303 billion. If the bullish revenue expectations are met then analysts see earnings increasing by 25% to $10 billion by 2024.

 

Management

Management, more specifically CEO Larry Merlo, is confident that CVS has a bright future. Mainly for the following reasons: the return of prescription drugs, the increase of Tele Health, and the reduction of COVID-19.

CVS’s retail and prescription sales understandably fell in Q2. However, according to Larry Merlo, “traffic is picking up and prescription utilisation is approaching normal levels”. Consequently, revenue in the coming quarters should return to promising pre-COVID levels. However, investors should not expect instant revenue recovery. Instead, a modest transition is likely.

Moreover, the pandemic accelerated CVS’s telehealth platform. Larry Merlo puts the growth into perspective as “CVS saw a dramatic 700% increase in telemedicine utilisation in the second quarter”. However, the growth of CVS’s telehealth platform will not stop after the virus fizzles out. Because CVS management is exploring the use of technology for home monitoring in 2021, with new product lines on the horizon.

Lastly, the pandemic shattered the CVS share price. However, the company’s establishment of 1800 test sites and a total of 2 million tested so far adds an extra layer of confidence. Also, CVS is increasing its focus on point of care testing right now. Thus, management has a strong conviction that CVS can weather the pandemic and aid in the suppression.

CVS stock forecast 2021 – bearish argument

Financials

There are two sides to the CVS financial coin, and the negatives should alert 2021 investors. The two major areas of concern include a declining Price-earnings ratio (P/E ratio) and the use of debt to increase Return on Equity (ROE).

While CVS may display robust earnings, their low P/E ratio of 9.1x would argue that future earnings are not so promising. Overall, the low P/E ratio means investors are anticipating limited earnings growth and hence the decline in the share price. Analysts seem to agree with the low P/E ratio. Especially, as they forecast CVS earnings to grow by 4.9% p.a while the health market posts 13% p.a. However if current investors are wrong CVS’s P/E ratio would place the company in the undervalued territory (opinion not advice).

Putting the share price volatility aside, CVS’s current and forecasted ROE, 12.1%, and 12.1% respectively is nothing to boast about. The general rule of thumb is that if the ROE is above 20% then it is considered financially strong. However, the more important question is what is driving the ROE debt or equity? In CVS’s case, it is debt. Considering the company’s debt to equity ratio increased from 36.2% to 103.4% over the past five years, investors should be wary of CVS’s ROE. Overall being below 20% both currently and in the future (2021-2024) as well as the concerning debt levels is a potential red flag.

Management

The major stumbling block in the CVS 2021 success story is COVID-19. Because the pandemic causes the medical industry to shift from elective surgeries and generic drug prescriptions. CVS is scaling up its testing. However, any delay in the 2021 vaccine timeline will impact both CVS’s share price and fundamental business operations.

Smart Money

The hedge fund activity around CVS is suggesting a short-term bearish sentiment for two reasons. First, according to Insider Monkey, the number of hedge funds holding long positions in CVS fell by 6 at the end of Q2 2020. Consequently, the smart money does not see potential in CVS for the following quarters. If true the decline in hedge fund positions would confirm that the low P/E ratio is because of limited future earnings growth. Moreover, the number of long CVS hedge funds were at an all-time high back in 2019. Investors can conclude that while CVS may experience earnings growth it is not enough to spark smart money interest.

Options

The CVS options chain is suggesting volatility is likely to be low for the remainder of 2020 and the beginning of 2021. October through to November puts/calls are relatively even in terms of volume. However, the CVS May options are more bullish. Interestingly by May, the world should have a viable vaccine and CVS would be back to business as usual.

Summary: CVS stock forecast 2021 – 2024

Overall, it seems the impressive earnings growth is catching up with CVS. All signs are pointing towards a stagnate or downwards share price for 2020. In particular a low P/E ratio, growing debt, and a reduction in long hedge funds. However, analysts are expecting strong earnings and revenue growth by 2024. It would be a smart move to investigate the long-term prospects of CVS further.

 

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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.

Written by Patrick McLoughlin, Senior Manager of YIG.

Will the Teva stock recover after a 10% sell-off?

Will Teva stock recover from the recent bloodbath? It is the big question institutions and retail investors are asking. On one end, investors believe the lawsuit and stagnating financials will cripple Teva. Conversely, the bullish hedge funds argue that Teva holds value in the long-term. Thus, today’s article will breakdown the recent sell-off, which institutions are bullish, and the likelihood of a recovery.

Table of contents 
1. Why is the Teva stock down? 
2. Can Institutional buying clarify the sentiment? 
3. Will the Teva stock recover?

Is the Teva rebound over?

Teva’s recent decline comes after the company faces legal scrutiny for price-fixing and violating an anti-kickback law. If the federal prosecutors find Teva guilty, than the consequences would be dire for the company and investors. Because Teva would be excluded from federal healthcare programs in the U.S., further jeopardising the Israeli company’s business and its long-term sales and growth. It seems the possible legal risk might be unpalatable for some investors, hence the sell-off.

Moreover, Teva’s inability to produce substantial profit margins might be causing investors to call it quits. For the past three quarters Teva has not been able to post earnings above 4%. Profit stagnation for three-quarters could suggest the business is fundamentally stuck for the moment. Consequently, short-term investors are likely selling.

Institutions are doubling down – is this a signal of a Teva rebound?

While more retail investors are flooding the market, institutional investors still own the underlying sentiment of Teva. Therefore, looking at which hedge funds are long and short on Teva and why is crucial.

Before the pandemic, hedge funds were leaning towards the bullish side of Teva. The virus understandably scared institutions away. However, in the past few months, the institutional bulls reclaimed victory. Especially as Teva Pharmaceutical Industries was in 31 hedge funds at the end of June. The most notable hedge funds leading the pack include Berkshire Hathaway and Abrams Capital Management.

It is essential to understand that when institutions go long on a stock, they are not looking for an overnight fix. Instead, they are looking to follow the value of the company until it reaches its milestones. In Teva’s case, the recent injection of bullish hedge funds is a point to the bullish argument.

Will the Teva Stock recover?

Before I begin, I remind our viewers that this is not advice. Instead ,this is investment commentary from extensive research 

To understand whether Teva will recover, investors should ask, is there even a dip to invest in, in the first place? Initially, the lawsuit, disappointing financials, and the recent sell-off may suggest there is no dip to invest in. For the imminent future, hedge funds would likely agree with the bearish stance.

However, if Teva is at capitulation and management’s recovery strategy is successful, then the institutions going long will be right. (opinion not advice) Teva is currently culling unprofitable product lines while also rolling out new offerings to the market. All with the intention to restructure the company for financial success. Furthermore, Teva could pay out the legal settlement, if found guilty, over multiple years. In which case, Teva would reach the light at the end of the tunnel.

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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.

Written by Patrick McLoughlin, Senior Manager of YIG.

FDA gives Sorrento Therapeutics the green light to begin Phase I COVID-19 trials – Should you short?

Sorrento Therapeutics (NASDAQ: SRNE) is putting on a volatility show this week. The bulls were leading the charge at the start of the week but took a big rest on Wednesday, which saw SRNE pullback by 12%. All bullish hope seemed lost. However, today the FDA gave Sorrento the green light to begin phase I COVID-19 trials. To say that the announcement was a super magnet for bullish investors would be an understatement. Many investors are now torn between shorting the optimistic jump or riding the wave. Thus, today’s article will breakdown the FDA news and deconstruct the short/long argument.

Table of contents 
1. Why all the hype? 
2. Is the Sorrento Therapeutics FDA news worth shorting?

Why are investors rallying behind the Sorrento Therapeutics FDA news?

Sorrento Therapeutics enormous 55% rally is because of three reasons. First, the pullback on Wednesday alerted many technical investors to jump in and for the longs to top up on their positions.

Second is the bullish reaction to today’s COVID-19 catalyst. The FDA permitted Sorrento to begin enrolling hospitalised patients for its Phase I COVID-19 trial. Phase I is usually not that noteworthy as it aims to test the drug safety’s and is a relatively easy hurdle to overcome. However, considering the trial relates to COVID-19, Phase I is significant. Hence, the volcanic volume in pre-marketing trading.

The future of Sorrento

Lastly, investors bought shares because today’s announcement symbolises a beacon of bullish hope. “The initial trial is expected to be followed by large trials targeting a potential Emergency Use Authorisation (EUA) submission as early as before the end of this year.” If the FDA were to grant Sorrento a EUA, STI-1449 would be fast tracked through the clinical timeline. In which the speculation surrounding Sorrento would become extremely bullish.

Moreover, Sorrento’s COVID-19 vaccine candidate holds impressive pre-clinical trial data (opinion not advice). For example, in the in vitro study, “STI-1499 demonstrated 100% in vitro neutralising effect against SARS-CoV-2”, ultimately preventing the infection of healthy cells. While past performance is not an indicator of future performance, investors may use pre-clinical data to predict potential Phase I outcomes. To add the cherry on top, a phase one announcement of this calibre often increases media coverage and, future volume. Therefore, the bullish future might have enticed investors to jump in before all the eyeballs come swarming over.

Sorrento Therapeutics FDA news – all hype or a real catalyst?

Before I begin, I am obliged to remind our viewers that this is not financial advice but rather investment commentary from extensive research

Short answer: Sorrento is likely to suffer a sell-off in the short-term (opinion not advice) 

Some investors see COVID-19 Phase I and are sold on the idea of buying shares. The Sorrento Therapeutics FDA news is a real catalyst that should lay the foundation for a bullish undertone. (opinion not advice) Because humans are wishful thinkers, and thus, investors will expect positive Phase I trial results. However, it is always important to remember you are buying shares off somebody else. So if they are willing to sell you their shares, you must ask why? In the case of Sorrento, investors might look to sell shares for two reasons. One, to take profit. The other likely reason is that a fall in SRNE activated investors stop losses. Both possible reasons should signal red flags. Because profit- taking implies the music is starting to slow down, and stop losses could mean the party could be over.

COVID-19 deception theory

The common theme of COVID-19 stocks rising on FDA news only to fall the following day is all too familiar. The COVID-19 deception theory is suggesting a SRNE pullback is likely. Thus, it is important to be impartial and not base your investment off phrases such as “but this COVID-19 stock is the exception”.

Overall, the move for the week is favouring the bullish side. Ultimately, signalling possible growth as time goes on (opinion not advice). However, the recent growth is likely unsustainable as it is difficult to top an FDA announcement. Hence a short term sell-off is likely.

If you enjoy our article or are wanting to learn more, you can subscribe to us by turning on notifications to get updates when we post a new article. From all of us at YIG, thank you for the support.

Here is our free, uncomplicated, and extensive ASX portfolio

https://youth-investment-group.com/portfolio/

Want access to free, uncomplicated, and smart COVID-19 Strategies then click below?

https://youth-investment-group.com/2020/04/09/how-to-profit-off-smart-investments-during-covid-19/ 

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.

Written by Patrick McLoughlin, Senior Manager of YIG.

INO surges 10% pre-market – here’s what you need to know

Inovio (NASDAQ:INO) is set to open 10% higher this morning after the promising address by CEO & President Dr. Joseph Kim on the H.C Wainwright 22nd Annual Investment Conference. Dr. Kim advised that the initiation of Phase 2 trials for their COVID-19 vaccine INO-4800 is on track to commence later this month. The CEO also addressed he is “very confident” INO will acquire additional external funding to accelerate these Phase 2 trials. Since the address on the 14th, INO has gained serious momentum. It seems INO has put itself back into the spotlight on Wallstreet. Lets breakdown what you need to know regarding the conference call and what the future looks like for INO.

Summarising the conference call – here’s what you need to know

The address by the CEO shed light on INO’s confidence regarding the imminent outlook for INO’s COVID-19 vaccine. The key points are as follows:

  • INO are “confident” Phase 2 trials will begin later this month after publication of the Phase 1 trial in the coming weeks.
  • Phase 1 human trials showed immunological responses in 100% of the 38 patients
  • Phase 1 non-human primate trials showed strong neuturalising T body immune responses in primates
  • CEO Dr. Kim advised investors to “stay tuned” for possible upcoming funding INO are expecting to receive coming into the Phase 2 trials – speculators believe the funding will come from WARP
  • INO plan to expand their Phase 2 trials globally, after receiving approval from the Chinese Government to conduct human trials in China with INO-4800 as well as the possibility of South Korea
  • Thermo Fisher partnership will allow INO to produce 100 million doses of INO-4800 in 2021 and further expansion for 2022

INO forecasts and outlook

Before I begin, I am obliged to remind our viewers that this is not advice but rather investment commentary from extensive research.

It seems the imminent future looks strong for INO as the company is on track to commence Phase 2 human trials at the end of September, according to CEO Dr. Kim. Not to mention the added potential funding for Phase 2 trials which if history tells us anything – it’s good news. However, speculators have snapped up the opportunity to buy INO yesterday suggesting a pull back is imminent (opinion not advice). The expected news to break this month however, is a positive sign for long term shareholders. Especially if Phase 2 trials can be commenced by the end of this month.

INO Forecasts by analysts

The 12 month forecasts from analysts according to CNN data suggest a median price target of $16 with a high end target at $36 and low end target at $8. These forecasts are heavily weighted upon the success of INO-4800. 5 analysts according to Nasdaq data suggest an average 12 month price target at $19 a share. The forecasts are definitely bullish at this stage with the potential commercialisation of the COVID vaccine.

INO investor Outlook

An interesting concept is to consider that INO will not be proportionally effected the same as other SP 500 corporations. Its stock price tends to fluctuate violently on company news and trial data and not COVID related market downturns (according to recent historic data). This is the associated risk with a stock like INO which heavily relies on its own success in the COVID trials.

In summary, the confidence from CEO Dr. Kim has reflected on Wallstreet. We await to review the publication of Phase 1 data and the announcement of Phase 2 trials in the coming weeks.

If you enjoy our article or are wanting to learn more, you can subscribe to us by turning on notifications to get updates when we post a new article. From all of us at YIG, thank you for the support.

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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Biomerica set to release earnings this Friday – here’s what you need to know.

Biomerica (NASDAQ:BMRA) is set to release Q2 earnings this Friday, with experts forecasting an expected EPS of -$0.05. This would mark a 37% improvement for Q2 Earnings Year on Year. The medical diagnostic manufacturer has thrived on the opportunity this year to develop a viable COVID-19 test. Biomerica’s rapid COVID-19 test is marketed produce results in 10 minutes via a finger prick. The fast acting test offers a less invasive method of diagnosis which is what continues to reel in investor interest. Currently, BMRA are unlikely release any further updates by Friday in regards to their EAU application for emergency use of COVID testing.

Table of Contents 
1. Introduction 
2. Key forecasts for Biomerica Earnings

Expert forecasts for Q2 Earnings

BMRA earnings are expected to improve from last quarter, with two experts pricing the EPS for Q2 -$0.05 according to NASDAQ. Q1 earnings this year posted an EPS of -$0.09, underperforming against experts forecasts. Taking this into consideration, BMRA are expected to turn a positive EPS by Q4 early 2021.

  • Revenues expected for this quarter are set at $1.9 million (Zack’s Consensus data)
  • Q3 revenues expected to double from 1.9 million to $3.8 million (Zack’s Consensus data)
  • Expectations are highly leveraged by whether BMRA can get the 10 minute COVID testing through the EAU. The revenue for Q3-Q4 will deviate heavily depending on whether BMRA can market and sell these COVID tests by the end of the year.
  • Expert predictions include the bullish outlook of 2021-22 if BMRA are successful in manufacturing the COVID test, with the EPS for 2022 Q1 forecasted to produce an EPS of 0.46

Investor outlook for Biomerica

Before I begin, I am obliged to remind our viewers that this is not advice but rather investment commentary from extensive research

The imminent future looks positive for Biomerica, with the EAU currently processing the emergency request for the FDA to approve the rapid COVID test. Biomerica announced this morning the CFO Janet Moore would be retiring and Steve Sloan would be taking this position. This restructure should have little effect on investor sentiment, with Steve Sloan bringing across experience at with previous roles at GE and Medtronic. Investors await further notice from BMRA surrounding the EAU approval, which has been in open air for months.

FDA Approval should see an immediate uptrend in the stock price , rewarding the investors who have secured low trading entries (opinion not advice). The forecasts suggest an influx in revenue through 2020-21 if all the necessary requirements (FDA approval) can be met. This is a stock to watch closely moving into 2021.

If you enjoy our article or are wanting to learn more, you can subscribe to us for free via email and get updated when we post a new article. From all of us at YIG, thank you for the support.

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.

Fluidigm soars 25% on COVID-19 FDA approval – here’s what you need to know

Fluidigm Corporation (NASDAQ: FLDM) just became a bull-market magnet as its COVID-19 saliva kit received FDA approval. Optimism is high in pre-market trading as some bullish investors believe this is news to send FLDM soaring. However, the bears are screaming that a pump and dump is coming at the bell. The division in sentiment causes many investors to be in a tug of war between FOMO and shorting. Today’s article will provide our readers with a breakdown on whether the COVID-19 rising star is bearish or bullish.

Table of contents
1. Breakdown of the FDA approval 
2. Everything you need to know before Investing

What does Fluidigm’s COVID-19 FDA approval mean?

The FDA is continuously looking to simplify the testing process during COVID-19. Fluidigm’s tick of approval represents just that, the FDA endorsing a more simplified testing approach. FLDM’s COVID-19 test (Advanta Dx SARS-CoV-2 RT-PCR Assay) is saliva-based, which means it does not require collection via invasive nasopharyngeal swab. However, coronavirus-saliva testing is nothing new, but what is unique is Fluidigm’s production technology. Because, Fluidigm is using an ultrahigh-throughput testing capability system, that eliminates the expense and complexity of extraction.To put the throughput testing capability system’s benefit into perspective FLDM could produce 6000 tests per day per system.

Fluidigm’s ability to simply COVID-19 testing is significant. Because the current testing methods are invasive, time-consuming, and are only relatively effective in responding to COVID-19 hotspots. Hence, FLDM’s saliva test could become an effective method to neutralise COVID-19 hotspots and, thus stave off the lockdowns. Also, investors and society are in vaccine and treatment limbo-land. Thus, FLDM’s FDA approval paints an optimistic view for COVID-19 testing and bullish investors.

Here is what you need to know before investing in Fluidigm

Before I begin, I am obliged to remind our viewers that this is not advice but rather investment commentary from extensive research

COVID-19 false hope theory

It is common to hear a COVID-19 stock go to the moon overnight only to return to Earth within the next few days. The rollercoaster can be brutal for some investors. The promise of unrealistic gains reels them in, but then the sell-off from the people who pushed the bullish narrative leave some investors burnt. While the COVID-19 false hope theory is more common in penny stocks,  it does not mean Fluidigm is immune. However, Fluidigm differs slightly from your typical COVID-19 stock. Because its meteoric 600% rise is over 6 months and follows a linear progression. Suggesting FLDM is a COVID-19 stock that is transforming from a speculation to a possible coronavirus play.

While the six month chart shows organic growth, Fluidigm’s short-term price action is more volatile. Today’s insurgence of the raging bulls should increase volatility. In turn, people investing in FLDM at the bell are more exposed to a potential sell-off. Overall, Fluidigm does not appear to be a loose end when looking at the general trend but could exhibit signs of the false hope theory days after massive market news.

Institutional weighting – good or bad?

Institutions own 74.9% of Fluidigm shares. Essentially, that means the analysts did their due diligence and thought FLDM was worth investing in. Significant institutional ownership is a strong bullish sign for rising COVID-19 stocks as analyst ratings often drive retail investor sentiment. However, if the FLDM hype fizzles out, we could see a majority of the FLDM institutions take their profit bags and leave. Overall, notable institutional ownership on the share registry is a positive sign for now.

If you enjoy our article or are wanting to learn more, you can subscribe to us for free via email and get updated when we post a new article. From all of us at YIG, thank you for the support.

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.

Here is our free, uncomplicated, and extensive ASX portfolio

https://youth-investment-group.com/portfolio/

Want access to free, uncomplicated, and smart COVID-19 Strategies then click below?

https://youth-investment-group.com/2020/04/09/how-to-profit-off-smart-investments-during-covid-19/ 

Written by Patrick McLoughlin, Senior Manager of YIG

Johnson & Johnson set to acquire Momenta Pharmaceuticals – here’s what investors need to know

Johnson & Johnson announced this morning that they have entered a “definitive agreement” to acquire Momenta Pharmaceuticals at $52.50 per share. The acquisition has been confirmed as an all-cash transaction, which has been approved “unanimously” by the Board of Directors from both J&J and Momenta. The acquisition is set to be finalised later this year, assuming all the closing conditions are met by both parties in the tender process. MNTA is up 69.39% pre-market while J&J share price has remained unchanged according to pre-market movements.

Table of Contents 
1. Acquisition details 
2. What this means for MNTA and J&J investors?

What this means for both MNTA and J&J investors?

MNTA Investors

There is no doubt, this is a very positive opportunity for MNTA to accelerate it’s current research and development in the treatment of autoimmune and rare diseases. At the core of MNTA business, lies the exploration and development of auto-immune diseases which have little to no current treatments.

MNTA have four treatments in the pipeline which include the use of Nipocalimab, to treat generalized myasthenia gravis (gMG), hemolytic disease of the fetus and newborn (HDFN) and autoimmune hemolytic anemia (wAIHA). These are three examples of auto-immune diseases that cause the immune system to react in a counter intuitive manner, causing harm to the host. The J&J acquisition will allow for further development of these treatments, ultimately assisting MNTA to reach a cure for these auto-immune diseases. This is excellent news for MNTA investors assuming the acquisition can be smoothly and efficiently finalised by the end of 2020.

J&J investors

J&J is one of the largest multi-national pharmaceutical companies in the US, boasting a tidy Market Cap at $395 Billion USD. The $6.5 Billion acquisition should have little effect to the Cash assets for J&J. All-cash acquisitions are a preferred alternative for most corporations as Cash agreements will not fluctuate at the levels stock value does. As large corporations focus on steady stock growth, the higher the buyers stock goes – the more they end up paying for the acquisition.

This is definitely a strong opportunity for J&J to extend their operations into the autoimmune treatment sector.

“We’re excited by the opportunity to further advance patient care by combining Johnson & Johnson’s world-class R&D, commercial and supply chain capabilities with Momenta’s talented people, pipeline and deep expertise in this important area.”

Jennifer Taubert, Executive Vice President, Worldwide Chairman, Pharmaceuticals, Johnson & Johnson – read full statement by J&J here

Summary of the risk involved

MNTA stock has boosted dramatically as J&J have agreed to buy-out all outstanding shares in MNTA via all cash transaction at $52.50. The risk for investors is that in the event the acquisition falls out, investors who bought in above $30 may be left with a significantly over priced stock. Although acquisition fall outs are rare, we have seen the detrimental effect it has on the investor. The recent Boeing acquisition fall out with Embraer was due to a three year long negotiation between both parties. Agreements were never met and the initial agreement fell out as per the closing conditions.

Nonetheless, this is also a strong opportunity for J&J to expand their wings into the auto-immune sector, lead by MNTA. This is definitely an acquisition to watch come late 2020.

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.

After rising 50% on Friday is Mesoblast now a good investment ahead of COVID-19 trials?

Mesoblast (ASX: MSB) (NASDAQ: MESO) was on our portfolio since May. However, volume started to climb higher this week as an advisory committee voted in favour of Mesoblasts pediatric drug remestemcel-L (Rynocil). The positive catalyst triggered a Mesoblast buying party on the ASX and the NASDAQ. For now, investors are optimistic about Mesoblast’s medium-long term future. However, the sentiment come Monday is uncertain. Some investors expect the biotech company to keep on rising next week. Whereas the bears forecast a Mesoblast sell-off next week.

Table of contents 
1. Why did Mesoblast soar this week? 
2. Update on the COVID-19 trial timeline. 
3. Is Mesoblast now a good investment?

 

Why is Mesoblast rise 50% on Friday

Mesoblast traded like a rollercoaster this week. The week started bearish as the FDA expressed concerns around the effectiveness of Mesoblasts remestemcel-L in treating acute graft versus host disease (aGvHD). FDA apprehension saw investors sell Mesoblast ahead of its meeting with the Oncologic Drugs Advisory Committee (ODAC). Consequently, Mesoblast fell 37% to $3.06. However, at the $3 range, Mesoblast reached capitulation, meaning all sellers had left the party leaving only buyers to drive up the price.

However, the real buying began when the ODAC unexpectedly voted in favour of Rynocil. The ODAC agreed that Mesoblast’s data indicated remestemcel-L could be an effective treatment for aGvHD. Ultimately driving a 50% rally at the bell on Friday.

However, YIG would like to point out that the recommendations of the ODAC are not binding. The FDA could still turn down Remestemcel-l. Thus, the ODAC’s suggestions must be convincing. Because the FDA will make the final decision on remestemcel-l on the 30th of September, and if they are not convinced, they can still deny Mesoblast despite Friday’s outcome.

Mesoblasts COVID-19 trial update

Mesoblast is no one-trick pony. The biotech has a robust clinical pipeline that covers aGvHD, chronic heart failure, degenerative back disc disease, and more recently, COVID-19. Mesoblast’s COVID-19 treatment is acting like a magnet to the wallets of investors. Especially as Mesoblast reported an 83% survival rate for 12 patients who underwent the COVID-19 treatment. 

Mesoblast is set to release interim analysis of its COVID-19 trial in early September. The report will likely assess the recovery in COVID-19 patients so far and the related side effects, with a judgement deciding whether the trial can continue. Thus, the COVID-19 hype should see investors pile in on the expectation of positive interim results (opinion, not advice).

 

Is Mesoblast a good investment now?

Before I begin,  I am obliged to remind our viewers that this is not advice but rather investment commentary from extensive research 

Short answer: Waiting for new resistance, support levels and then riding the COVID-19 anticipation holds the most weight (opinion not advice)

Mesoblast will become more volatile from here on out. Allowing investors to capture massive upswings in the stock. However, volatility will increase your risk to major sell-offs, and Mesoblast is known for short-term cliff edges.

Despite volatility increasing the underlying sentiment towards Mesoblast should remain bullish. Mainly because of the upcoming catalysts, which, if positive, should elevate Mesoblast to all-time highs.(opinion not advice) Investors will likely view leading up to the COVID-19 trial results, Chronic back pain, and FDA aGvHD decision with optimism. Because humans are wishful thinkers. Thus, riding the anticipation of catalysts, like what some investors did till Friday, holds more weight than trying to day-trade the biotech.

 

If you enjoy our article or are wanting to learn more, you can subscribe to us for free via email and get updated when we post a new article. From all of us at YIG, thank you for the support.

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.

Here is our free, uncomplicated, and extensive ASX portfolio

https://youth-investment-group.com/portfolio/

Want access to free, uncomplicated, and smart COVID-19 Strategies then click below?

https://youth-investment-group.com/2020/04/09/how-to-profit-off-smart-investments-during-covid-19/ 

Written by Patrick McLoughlin, Senior Manager of YIG.