I’ve taken an incredibly bullish stance on Sellas Life Sciences Group Inc (NASDAQ: SLS) as of late, and those who have been in for a while hope I’m right. Let’s face it the stock has tumbled throughout 2019, giving up the majority of its value.
Nonetheless, I believe that there’s a catalyst on the horizon for the stock that could lead to a strong reversal. In fact, it’s something that I’ve talked about in previous articles. So, what’s next for SLS?
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SLS Stock Looks Good Ahead
As mentioned above, Sellas Life Sciences hasn’t had the best of runs in the market as of late. I’m not telling you this to scare you. The truth of the matter is that it only expands the opportunity.
Currently, the stock trades at around $0.17 per share. That’s a far cry from the $1.41 per share it started out at in the beginning of the year or the high of $1.66 reached on January 9, 2019. However, that only means that if a big catalyst hits, it’s got more room to run and investors have the opportunity to get in at a discount.
The catalyst is coming. The company will be reporting Phase 2 clinical trial data on a combination treatment that’s being developed as an option for breast cancer. This trial data is expected to come soon. I’ve shared a lot about this in the past. To find out more, click the link above, titled “previous articles.”
Nonetheless, breast cancer is a huge market, with experts expecting it to grow to more than $38 billion annually by the year 2025. Therefore, positive data in this indication would be very meaningful, and I’m expecting for this data to be positive.
As a result of the data that I believe will act as a catalyst, the shorts that have been holding SLS down will likely abandon their positions, leading to a short squeeze. But that’s not all!
What Happens After The Short Squeeze?
Keep in mind that I cannot predict the future, therefore, this is all pretty speculative. Nonetheless, here’s how I see it:
After the short squeeze, we’re likely to see some profit taking, as is just about always the case in penny stocks. Nonetheless, this isn’t likely to last long.
Should positive data be the result of the Phase 2 study, Sellas Life Sciences is likely to quickly jump into a pivotal Phase 3 study, setting the stage for a potential New Drug Application with the FDA.
I’m sure that by now, you see where I’m going here. The bottom line is that there’s not just one catalyst ahead for SLS, there are SEVERAL!
Moreover, I’m not the only one that sees the potential here. In fact, the average analyst rating is a buy with the high end of the price targets suggesting the potential for gains as much as 76 times the company’s current trading price. Even low price targets suggest gains in 30 multiples.
I never blindly follow the views of analysts. With that said, when you have a company that clearly has catalystic events ahead, consistently trades on high volume, and has been beaten down by shorts for months, you have an opportunity, and analysts clearly see that opportunity!
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