Growth Focus: Viralytics Limited

by Patrick Taylor




Date of Data Capture: 17/5/2016
 
Name: VIRALYTICS LTD (VLA)
      
Classification:Healthcare/Biotechnology
 
Current Price: $0.79
 
Market Capitalisation: $192M
 
Forecast EPS Growth: n/a%
 
Gross Yield: 0%
 
Consensus Price Target: $2.53* (*thin coverage)
 
# Covering Analysts: 2*
 
Discount at Current Price: 220%*
 
Price Target Trend: Increasing
 
Signal Time Frame: Long (Monthly) Medium (Weekly)
 
Trend Bias: Up Flat (Monthly) (Weekly)

Indicators:
Short-term:Positive Neutral
Medium-term: Positive
Long-term: Positive

Recommendation: Buy
 
Set up Notes:
•          Currently pushing up through 80c resistance we should see this consolidate in a run towards the next resistance structure target at 100c.
•          This stock can run hard when in-trend, we are hoping to see a follow through from positive long-term signalling combined with aggressive valuations.
•          Some minor resistance remains around 90c but shouldn’t be too hard to cross and support clusters down to 70c before thinning out again.
 
 
  Growth Focus: VIRALYTICS LTD (VLA)
 
Our primary focus here is capital gain, we will select our stocks from the ASX top 500 All Ordinaries Index.
 
Continuing in our ongoing theme of following (and buying) strength we find ourselves looking at up-and-coming biotech; Viralytics Ltd (VLA). This company is developing virus technology to fight cancer in general and melanoma in particular. They are moving through combination trials for two treatments and have been seeing some very good results. This positive performance has been reflected in a rising share price and with further trials scheduled and funding secured we believe there should be more to come.
 
While the beginning of this new long-term uptrend was first signalled through late in 2014, the real breakout from their long-running downtrend began in early 2015. Since then we have seen VLA trading aggressively and well, moving up through overhead resistance, delivering a 300% return in just under a year.
 
From the middle of 2015 we have seen those sharp gains somewhat blunted by a sideways consolidation, one that seems to be on the cusp of capitulation right now. With the current share price testing the structural resistance ceiling of 80c (while also remaining above dynamic support at 77c) we find the same well correlated long-term signal from 2014 turning positive again. 
 
Being so near the major resistance barrier at 80c we expect some volatility before breaking through it. There remains structural support at 75 and 70c with strength at 60c. In addition to this we have dynamic support clustering down from 77c to 68c which should continue to nudge things forward.
 
Targets to keep in mind would be 100c structural resistance, combining well with a comparable dynamic target at 98c. The air gets thin pretty quickly above $1.00 and after $1.07 no dynamic resistance remains to keep company with historical resistance structures at $1.50 and above. These targets may seem aggressively lofty but are actually reasonably modest compared to some analytical views with the (thinly covered) consensus being 220% higher than the current 79c. For now we will be happy with the path ahead set for Viralytics and the potential for further good news and results.

Disclaimer

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