Biotech Stock Rally Could Soon Take a Breather

AKRO has been climbing since its November lows

Deputy Editor
Jan 9, 2024 at 3:55 PM
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The shares of Akero Therapeutics Inc (NASDAQ:AKRO) have been steadily climbing from their November lows following a steep early October bear gap, though pressure seems to have appeared at the $25 level. Plus, if past is precedent, the biotech name could be headed for a short-term dip. 

AKRO's recent rally took it within one standard deviation of its 80-day moving average, a trendline with historically bearish implications. According to Schaeffer's Senior Quantitative Analyst Rocky White, the equity stock has seen five similar signals over the past three years, and was lower one month later in 80% of those instances, averaging a 6.9% loss. 

AKRO Jan9

A round of bear notes could provide headwinds as well. All nine analysts in coverage carry a "strong buy" rating on Akero Therapeutics stock, while the 12-month consensus price target of $42.88 is an 86.8% premium to current levels. 

When weighing in on AKRO's next move, options look like a good way to go. This is per the stock's Schaeffer's Volatility Index (SVI) of 63%, which sits in the low 11th percentile of its annual range, meaning options traders are pricing in low volatility expectations at the moment. 

 

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