Inovio to Plunge Ahead of Earnings Report

About the company

Inovio Pharmaceuticals Inc (INO) is a biotechnology company that focuses on developing DNA immunotherapies and vaccines to treat and prevent various cancers and infectious diseases. The company develops products based on its core SynCon DNA plasmid technology and electroporation delivery technology.

Recent history

When the pandemic roiled America in 2020, COVID stocks, including Inovio, gained momentum. Robinhood named Inovio as one of the top 10 most traded stocks on its platform in April 2020, putting Inovio in line with Microsoft (MSFT), Disney (DIS), and Tesla (TSLA). However, the company hasn't been successful in developing a vaccine.

Initially, Inovio announced plans to develop COVID-19 vaccines targeting the recently discovered Omicron variant, which boosted the stock. However, in March 2022, Inovio stated that it paused the development of its phase 3 INO-4800 trial.

The company announced an update of the strategy on the Q1, 2022 earnings call and its more recent CEO presentation at Jefferies 2022 Global Healthcare Conference in June 2022.

CEO Shea described the situation as follows:

"As the COVID-19 pandemic evolves towards the endemic phase, the need for booster vaccines to protect against severe illness and death represents a growing and strategic opportunity. In light of this, we now believe that Inovio can have the greatest impact and serve the most pressing public health needs by focusing on the COVID vaccine in our heterologous booster strategy".

Upcoming events

Inovio Pharmaceuticals Inc will release the Q2 2022 financial results on August 9, after the market close (23:30 GMT+3). Following the release, INOVIO will host a live conference call to discuss the financial statement and provide a general business update.

What to expect? 

The recent history shows the stock usually falls ahead of earnings reports on expectations of worse-than-expected results. Moreover, after the two latest reports (May 10, 2022, and March 01, 2022), the price opened lower with a gap and returned to growth the next day. 

In Q2 2022, the company didn't succeed in drug development, and actual financial results will likely underperform the expectations. Therefore, FBS analysts believe the stock might plunge ahead of the report.  

Technical analysis

INO, H4 chart

Resistance: $2.27, $2.35

Support: $1.94, $1.83, $1.73

On Friday, July 29, the stock dropped out of the descending channel despite the growth of the US stock indices, highlighting its weakness ahead of the earnings report. 

If the price doesn't return inside the channel on Monday, the bears will be able to bring it down to the $1.73, 61.8 Fibonacci level. Moreover, the breakout of $1.73 opens the way to $1.40. 

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Author: FBS Analyst Team

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