NEW BULLISH Plays
Zafgen, Inc. - ZFGN - close: 39.75 change: -0.22
Stop Loss: None, no stop at this time.
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on September -- at $---.--
Listed on September 16, 2015
Time Frame: Exit 6 to 8 weeks
Average Daily Volume = 232 thousand
New Positions: Yes, see below
Most of us have a few extra pounds hugging our waistline. Did you know that more than one third of adults in the U.S. is officially obese? That's the story from the Centers for Disease Control and Prevention. The danger of being too overweight can lead to higher rates of heart disease, diabetes, stroke, and even cancer. ZFGN wants to change that.
ZFGN is in the healthcare sector. According to the company,
"Zafgen (ZFGN) is a biopharmaceutical company dedicated to significantly improving the health and well-being of patients affected by obesity and complex metabolic disorders. Zafgen is focused on developing novel therapeutics that treat the underlying biological mechanisms through the MetAP2 pathway. Beloranib, Zafgen's lead product candidate, is a novel, first-in-class, twice-weekly subcutaneous injection being developed for the treatment of multiple indications, including severe obesity in two rare diseases, Prader-Willi syndrome and obesity caused by hypothalamic injury, including craniopharyngioma-associated obesity; and severe obesity in the general population. Zafgen is also developing ZGN-839, a liver-targeted MetAP2 inhibitor, for the treatment of nonalcoholic steatohepatitis, or NASH, and abdominal obesity, as well as second-generation MetAP2 inhibitors. Zafgen aspires to improve the lives of patients through targeted treatments and has assembled a team accomplished in bringing therapies to patients with both rare and prevalent metabolic diseases."
Regular readers know that biotech stocks can be high-risk, high-reward trades. The right headline could send ZFGN soaring while the wrong one could see it gapping down at the opening bell. Odds are if the market is going to rally then biotechs tend to outperform as bullish investors swing for the fences and bet on a big return.
Shares of ZFGN priced at $16.00 when it IPO-ed on June 19, 2014. Shares opened at $20.00. Shares hit an intraday high near $55 in March this year. Since then ZFGN has been consolidating. The consolidation has taken a bit of a bullish bias with higher lows if we discount the market's plunge in August.
Today ZFGN is poised to breakout past major resistance at the $40.00 level. A breakout here could spark some short covering. The most recent data listed short interest at 15% of the very small 20 million-share float. The point & figure chart is already bullish with a quadruple top breakout buy signal and a $54.00 target. Tonight we are suggesting a trigger at $40.35 to launch bullish positions.
NOTE: ZFGN does have options but the prices and the spreads are outrageous. I would avoid them.
Trigger @ $40.35
- Suggested Positions -
Buy ZFGN stock @ $40.35
Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.