Compugen Ltd. (CGEN) shares rose more than 5% during Thursday's session after Cantor Fitzgerald initiated coverage on the stock with an Overweight rating and a price target of $10 per share, reflecting a 65% premium to Thursday's closing price.
Analyst Varun Kumar is "cautiously positive" and sees the stock as a high-risk, high-reward play over the next 12 to 18 months. The analyst wrote in a research note that a large biopharma firm may be willing to form a more mature and strategic partnership around COM701 after the second half of 2020 combination data and first half of 2021 single-agent data, if the results support it as a potential first-in-class agent.
In November, the company said that COM701 was "well-tolerated" in a Phase 1 clinical trial with no dose-limiting toxicities observed. The clinical trial also showed initial signs of anti-tumor activity in the heavily pretreated patient population enrolled in the study. The company has also made progress securing FDA clearance for its IND application for COM902, another immuno-oncology therapeutic antibody.
From a technical standpoint, the stock rebounded from its 50-day moving average toward upper trendline resistance. The relative strength index (RSI) remains neutral with a reading of 55.27, while the moving average convergence divergence (MACD) remains in a downward trend. These indicators suggest that the stock has room for further upside, but the overall trend has remained bearish since December 2019.
Traders should watch for a breakout from an ascending triangle and trendline resistance at $6.20 to fresh highs. If the stock moves lower, traders should watch for a breakdown from the 50-day moving average and trendline support near $5.75. The pennant continuation pattern suggests that the stock could continue its trend higher over the long term, but intermediate-term technical indicators look bearish.
The author holds no position in the stock(s) mentioned except through passively managed index funds.