Unpacking This Sustainable Biotech Stock Breakout

There's massive short-covering potential for AMRS

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Amyris, Inc. (NASDAQ:AMRS) is a synthetic biotech and renewable chemical company. A year ago, AMRS was sitting in penny stock territory. Now trading in double-digits, the shares are worth a closer look.

At last check, AMRS was trading at $16.93, a far cry from its Nov. 6 record low of $1.87. And while the shares are off 4.7% in the last month, support has emerged at their 60-day moving average. There's massive short covering potential for Amyris stock too; 21% of its total available float is sold short. At the stock's average pace of trading, it would take four days for shorts to buy back their bearish bets.

AMRS Stock Chart

From a fundamental point of view, Amyris stock is still far away from being worth its current market cap of $4.2 billion. What has primarily driven AMRS over the past 12 months has been investor belief in the company’s technology. However, aside from its woeful earnings record on consistent underperformance, AMRS has also struggled to make significant progress on the top line. In fiscal 2020, Amyris increased its revenues by 13%, which isn’t bad, but not what you would expect from a biotech stock that has grown the way AMRS has. Additionally, the biotech company has only increased its revenues by 21% since 2017.

Moreover, Amyris has only seen an increase in losses on the bottom-line over the past few years. Since fiscal 2017, AMRS has decreased its net income by roughly $260 million, bringing total net losses down to $331 million for fiscal 2020.

One note for potential options traders; the security's Schaeffer's Volatility Scorecard (SVS) sits at a high 88 out of 100. This means AMRS has exceeded volatility expectations during the past 12 months -- a boon for options buyers.

 

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