Tenax Therapeutics Inc (NASDAQ: TENX) is flying in the market this morning. However, if you’re looking for press releases or SEC filings, you’ll be disappointed. The company hasn’t issued any news. So, what’s the deal?
The gains seem to be the result of an analyst initiation of TENX stock. Here’s what’s happening:
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- TENX Stock Rockets on Analyst Coverage
- A Short Squeeze In Play
- Is Tenax Therapeutics Onto Something?
- Risks to Consider Before Buying TENX Stock
- Final Thoughts
TENX Stock Rockets on Analyst Coverage
While Tenax Therapeutics didn’t issue any news this morning, the company didn’t have to. It was picked up by an analyst, causing all of the excitement we’re seeing this morning.
HC Wainwright announced the initiation of TENX stock, giving it a Buy rating with a price target of $5. Considering that the stock just broke above $1 per share, that price target suggests the potential for gains in multiples.
While it’s never a good idea to blindly follow the opinions of analysts, as there are many cases of a conflict of interest, analyst coverage is exciting news. After all, when a respected analyst like HC Wainwright sets a price target suggesting that gains in multiples are ahead, the stock gets a bit of attention. That’s exactly what’s happening this morning.
A Short Squeeze In Play
Not only did the HC Wainwright initiation of TENX stock send it for the top, it seems to have triggered a short squeeze. After all, the stock has been trading on some pretty heavy short interest.
When Tenax Therapeutics started to head up as a result of the analyst coverage, those who shorted the stock began racing for cover in an attempt to stop the bleeding. This ultimately led to a sharp increase in both volume and price in what’s known as a short squeeze.
However, I believe there’s more room in this run. We’re talking about a stock with a public float of under 13 million shares. With an ultra-tiny float like that, gains in multiples could be the result if this short squeeze continues.
Is Tenax Therapeutics Onto Something?
So, what’s so exciting about Tenax Therapeutics? The company is working on a treatment known as levosimendan as a potential option for patients with pulmonary hypertension. Importantly, that’s a market that experts expect to grow to be worth $7 billion annually relatively soon.
Well, TENX isn’t too far from cutting its slice of this massive pie.
At the moment, investors are awaiting the results of an FDA meeting surrounding the design of a Phase 3 trial. Once the design is approved, the company will be moving into late-stage development and could be bringing the drug to market relatively soon. Ultimately, there’s quite a bit to be excited about at the moment.
Risks to Consider Before Buying TENX Stock
If you’re planning on investing in anything, you’re planning on accepting risk. Risk is just part of investing. When it comes to investing in TENX stock, the most significant risks to consider include:
- Capital Risk. First and foremost, as a clinical stage biotechnology company, Tenax Therapeutics has no way to generate revenue through the sale of its products. Therefore, it must survive on the cash it has on its balance sheet until it reaches commercialization. If it is unable to do this, a dilutive offering may rob existing shareholders of value ahead.
- Clinical Risk. A lot is hanging on the company’s coming Phase 3 clinical trial. If that trial were to end in failure, significant losses may be the result.
- Regulatory Risk. Finally, even if the trial goes well, the company must receive approval from regulatory authorities in order to commercialize its therapeutic options. Should the FDA or any other regulatory authority reject the drug, significant declines could be the result.
All in all, there are good reasons to be excited about TENX stock at the moment. With HC Wainwright diving in with an overwhelmingly positive opinion, and the company on the verge of the initiation of a Phase 3 clinical trial, these are exciting times.
While there are risks to consider, and investors should do their own due diligence, if all goes well in the months ahead, TENX stock could become a very lucrative investment.