After more than doubling in a week, is it too late to jump into iBio (NYSEAMERICAN:IBIO) stock? As a novel coronavirus vaccine contender, this speculative biotech stock has seen its shares make epic moves so far in 2020.
Year-to-date, the stock is up 2337.7%! In the last month alone, shares have climbed 313%. The initial epic rise in March is self-explanatory, given the pandemic and subsequent speculation in vaccine stocks. But, why have shares taken off like a rocket yet again so far this month?
Firstly, news of IBIO stock being added to the Russell 2000 and Russell 3000 indexes helped move the needle. Secondly, and more importantly, shares are moving higher on the heels of positive news coming out of Moderna (NASDAQ:MRNA), and other leading vaccine contenders.
As I’ve discussed previously, Moderna is the clear favorite in the coronavirus vaccine horse race. But, what are iBio’s odds? Can this scrappy underdog prevail? That is to say, come out with a viable, marketable vaccine? Or will shares tumble, as speculation turns to disappointment?
Given the unpredictability of biotech, it’s tough to make a call. Whether on the long side or the short side. Go long (buy) iBio, and shares could collapse as Moderna or another rival wins the vaccine horse race.
Go short (sell) iBio, and you could lose your shirt, as the company releases positive news, and shares rally even higher. So, what’s the way to go? With the easy money already made, and high uncertainty whether shares crater, or rally higher, staying neutral may be best right now.
The Bull Case for IBIO Stock at Today’s Prices
Back in June, I included iBio as one of 5 micro-cap stocks to gamble on for big gains. In hindsight, shares were a gamble worth taking (the stock traded around $1.64 per share at the time). Yet, as shares today sit just under $6 per share, is this still a strong high-risk/high-return opportunity?
Possibly. Our own Louis Navellier believes big catalysts are just around the corner for IBIO. How so? The company’s patented lichenase booster molecule, or LicKM, could enable the company to produce a single-dose vaccine.
If iBio can achieve this, it easy to see shares moving even higher from here. A single-dose vaccine could move this contender from “also-ran” to “front-runner” status. But that’s not all! As InvestorPlace’s Joel Bagole discussed Jul 14, another potential catalyst for the company is its proprietary manufacturing platforms.
By working on a vaccine, as well as creating a platform to fast-track vaccine production, iBio may be well-positioned. If its vaccine candidate wins out, they can quickly bring it to market. But, if another contender takes the crown, the company could still profit, by becoming a contract manufacturer for said winner.
With both these factors in mind, this may be one of the most under appreciated vaccine plays out there. At least it was, back when it traded under $2 per share. However, these catalysts are more than priced-in at today’s prices. That’s not an invitation to go short (more below). But, there’s plenty of reason why IBIO stock could go lower from here.
Shares Offer Little Downside Protection, But Don’t Go Short
iBio has many factors working in its favor. But, at the end of the day, this company remains a long-shot compared to stronger candidates like Moderna. As this commentator noted, the company lacks a strong product line to fall back on if its coronavirus catalyst fizzles out.
That’s not to say shares will tumble back to penny-stock status. But, without the potential for a game-changer like a coronavirus vaccine, it’s doubtful the stock can sustain its current market cap ($718.5 million).
So, should you short IBIO stock at today’s prices? Not so fast! Granted, the stock looks like a great short at the current frothy valuation. But, as seen with Moderna, as well as another major rival, Inovio (NASDAQ:INO), just a bit of positive news could send shares parabolic yet again.
Bottom line, this remains a “predicting the unpredictable” situation. With much difficulty handicapping its odds of success or failure, you can’t take a long (or short) position without taking on inordinate amounts of risk.
Stay on the Sidelines With IBIO Stock
This vaccine contender may have a shot at success. Yet, given the recent rally, the easy money’s already been made. At today’s prices, there’s less of a chance the stock doubles again. But, there’s plenty of risk shares crater back to prior price levels.
That being said, it’s too risky to go short as well. The party may soon be over for coronavirus stocks. But you never know when exactly the music is going to stop. In other words, don’t be a hero by trying to call a top.
So, what’s the play? Stay on the sidelines with IBIO.
Thomas Niel, contributor to InvestorPlace, has written single-stock analysis since 2016. As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities.
