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An email from Edward to my Seeking Alpha account:
I've followed your work on biotechnology investments for some time and have found your ideas resonate with the highest quality. I was wondering what your thoughts on ImmunoCellular Therapeutics (IMUC) are at this time?
Dawson James came out with a report this morning citing a price target of $5.
I look forward to your comments.
VFC's Take: About a month ago I mentioned that it might be worth picking up a few shares on the recent retreat, and indicated that I wouldn't be surprised to have seen the stock drop even further over the short term.
Since that time the company announced a financing deal and stated that the near term intention was to receive an uplisting to the AMEX.
Shares responded positively to both announcements and IMUC is trading for triple from where it traded just six months ago.
With that being said, could the price go even higher? Especially given that Dawson James (as Edward mentioned in his email) initiated positive coverage of the company with an upbeat price target?
First I'll use this opportunity to emphasize why I don't like analysts. There's a good chance that IMUC could keep rising to the five dollar mark, especially given that its market cap of fifty million is relatively modest considering the potential of the pipeline (although that pipeline is still far from market), but there's also a chance that a buy here could be a chase, given the already very significant gains realized by this stock.
If the analysts really were your friends, you'd think that the positive coverage would have come when the stock was trading for below a buck. The fact that it came after the run indicates to me that James' buddies were buying in before the upgrade was announced.
Regardless, I still like IMUC as a long term, speculative 'possible next Dendreon' play. I won't rule out another dip to well below two bucks, however, if only because it's always worth expecting that sort of volatility in this sector, but as the Phase II trials develop, the share price could inch upwards and maybe even approach the five dollar mark identifed by Dawson.
That said, once the ticker is on the big boards then the shorts can play their game with relative ease, so I'd expect quite a bit of volatility.
The real time to buy was when this stock was at a buck or below, but even at these prices, we're still looking at a nice 'buy the dips' play.
As long as you expect volatility.
Disclosure: No position.