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AVANIR (AVNR) Up On Zenvia, Teva Buyout News

|Includes: Avanir Pharmaceuticals, Inc (AVNR)

If you’re looking for some biotech penny stock action today, you’ll want to check out AVANIR Pharmaceuticals (NASDAQ:AVNR). The rumor is - and it’s strictly a rumor - that Teva is mulling an acquisition. AVANIR shares are up firmly, though not yet wildly, on the buzz.

A Teva acquisition of AVANIR actually makes a little sense. Teva has been looking for a foothold into the arena. And. Zenvia is targetng unpredictable emotional episodes of pseudobulbar affect (or PBA), which is also known as involuntary emotional expression disorder (IEED). However, Zenvia can also treat diabetic peripheral neuropathic pain.

The assumption was that Endo Pharmaceuticals would get the honor. But, AVANIR’s Zenvia could fit the bill too.

If Teva can actually buy AVNR at $2.00 per share, most owners would be - and should be - greatly disappointed. Some analysts suggest the price should be closer to something between $6.00 and $8.00, especially considering the chances of Zenvia’s approval are high.

At a 5% market penetration, Zenvia could produce annual revenue in the neighborhood of $200 million. That’s largely where the $6.00 to $8.00 per-share valuation is coming from.

As for the stock itself, I like this chart as much as I like the story/rumor. I see a clear break in a falling resistance line. You could also make a good argument that the last couple of weeks formed a technical wedge, and today’s modest move here is a breakout of that triangle shape.

You can also see that last week’s bottom and the resumption of the uptrend was fueled by a much longer-term support line being met.

Bottom line - this is just a good looking technical chart, especially for a true penny stock. The accompanying story ain’t too shabby either.

The one thing that’s missing with today’s move from this penny stock is volume. You’d think with these kinds of rumors floating around - unconfirmed though they may be - that the market would be all over this potential three to four bagger. Maybe the market collectively sees a problem…let me know below if that’s what’s holding shares back.

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