We recently compiled a list of the 10 Best New Penny Stocks To Buy Now. In this article, we are going to take a look at where Metagenomi, Inc. (NASDAQ:MGX) stands against the other new penny stocks.
Fears of a US recession are growing, sending stock markets down, and investors around the world are on edge. The US Bureau of Labor Statistics (BLS) released July job figures that were worse than anticipated, revealing only 114,000 new jobs generated in July compared to the predicted 175,000. These data alarmed investors, as did the disappointing latest earnings from tech giants. As a result, the manufacturing industry in the US had an eight-month low in activity and the unemployment rate reached a three-year high of 4.3% due to a decline in new contracts.
Monday was the worst day for Wall Street in nearly two years as key indexes fell on worries about a US recession. The average of the 500 largest publicly traded companies plummeted 3% to 5,186.33. However, the 500 large companies are still up more than 10% for the year.
Chris Weston, of the US online stockbroker Pepperstone, said global markets were “at a truly important juncture”. “What really matters now is whether money managers and traders feel sentiment has become too pessimistic, or if this deleveraging and risk aversion manifests into even higher volatility and drawdown.
Opinions among analysts regarding the gravity of the problem differ. James St Aubin, chief investment officer at Ocean Park Asset Management, “We’re witnessing the fallout from the curse of high expectations,”, while Art Hogan, chief market strategist at B. Riley Wealth, said that markets may be overreacting. He stated:
“This isn’t a Category 3 hurricane, but we are seeing how markets react to signs that the economy is normalising after turning hot in the first half of this year.” “Markets can find themselves overreacting and investors [latch] on to anything as an excuse to take profits.”
The 500 large companies have gained more than 15% this year, despite recent setbacks.
The market’s anxiety may be heightened by the possibility that fewer initial public offerings (IPOs) might take place this year. However, 154 IPOs were listed on the US stock market in 2023, but this was 85% fewer than the record-breaking 1,035 IPOs in 2021 and 15% fewer than the 181 IPOs in 2022, 82.5% fewer than in 2021. IPOs totaling 6,203 have occurred between 2000 and 2024. 2009 had the fewest, with just 62. With 1035 IPOs in total, 2021 established an all-time record, surpassing the previous high of 480 in 2020.
George Chan, EY Global IPO Leader, says:
“As 2024 unfolds, participants in the IPO market are entering uncharted territory. IPO candidates are influenced by the recent pivot in investors’ preference toward proven profitability in an altered interest rate landscape, and are doing this while facing the intricate dynamics of an intensified geopolitical climate and the buzz around AI. To succeed in this shifting environment, IPO prospects must remain flexible and prepared to seize the right moment for their public debuts.”
Recent data from EY Global IPO Trends Q2 2024 show that in 2024, the US IPO markets saw a strong start that increased global proceeds. On the other hand, the Asia-Pacific area had a poor start, which affected the worldwide volume overall. In the first half of 2024, the industrials (21%), technology (19%), and materials (11%) markets led the way in global IPO issuance, with India dominating in terms of deal volume. Meanwhile, the technology (21%), health and life sciences (17%), and industrials (15%) markets topped the IPO proceeds rankings, with the US attracting the lion’s share of these sectors. As the home to many of the world’s leading technology and healthcare companies, the US has a strong ecosystem for startups. Driven by favorable market conditions, expectation of interest rate cuts, and innovations in artificial intelligence (AI), IPO deal values have skyrocketed in both these markets. Moreover, a handful of large deals contributed to a 67% increase in proceeds from IPOs in the US in the first half of 2024.
Methodology:
In this article, we first used a stock screener to list down all stocks trading under $5 (as of the writing of this article) with high institutional ownership. We have limited our selection to stocks that went IPO over the past year. From the resultant dataset, we chose 10 stocks with the highest number of hedge fund investors, using Insider Monkey’s database of 920 hedge funds in Q1 2024 to gauge hedge fund sentiment for stocks. We have used the stocks’ market cap as a tie-breaker in case two or more stocks have the same number of hedge funds invested.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here)
A scientist in a lab conducting research on cell-based therapeutics and biotechnology.
Metagenomi, Inc. (NASDAQ:MGX)
Number of Hedge Fund Investors: 16
Metagenomi, Inc. (NASDAQ:MGX), a company situated in Emeryville, California, was established with the goal of developing a “comprehensive genome editing toolbox” that would aid in the genetic modification of diseases. All of the company’s prospects are currently in the preclinical or discovery stages of development. Metagenomi’s major focus includes liver diseases such as Hemophilia-A, primary hyperoxaluria Type 1, and Transthyretin Amyloidosis.
The company made its IPO on February 9, 2024. Insider Monkey disclosed 16 funds that owned MGX hedge funds in Q1 2024.
After going public in February, Metagenomi has been working on its Hemophilia A program and is in good financial standing, with enough cash on hand to support operations through 2027. The solid financial sheet has $327 million in cash and cash equivalents as of Q1 2024. The company plans to deliver 12-month non-human primate (NHP) durability data from its proof-of-concept study for hemophilia A later this year.
Metagenomi previously published encouraging findings, successfully integrating a functional Factor VIII gene in non-human primates. An important achievement was reached when this integration resulted in clinically meaningful levels of Factor VIII for as long as 4.5 months. The company wants to create a treatment for hemophilia that is more sustainable than BioMarin’s Roctavian, which may lose its effectiveness over a period of 12 to 18 months as a result of transgene deactivation.
Metagenomi is backed by major pharma firms and is well-capitalized. MGX saw significant revenue growth in Q1 2024, rising from $8.66 million to $11.16 million, a 99.45% increase over the same quarter the previous year. MGX had a whopping 160.21% YoY revenue growth from 2022 to 2023.
At major conferences, SGMT showcased their exciting developments in gene editing and hemophilia A. More than 900 base pair gene integrations in human cells and five times better genome targetability were highlighted in Q1 2024. Metagenomi’s CAST technology can execute large-scale DNA-templated integrations, competing against other companies in the long-sequence gene editing domain.
Brian C. Thomas, Chief Executive Officer and Founder of Metagenomi in Q1 2024 earnings call stated:
“Our continued execution in the first quarter of 2024 furthers our mission to develop potentially curative genetic medicines by leveraging our extensive genome editing capabilities,”. “We are excited by the reception of our presentation on our wholly-owned investigational development program in Hemophilia A at the World Federation of Hemophilia World Congress, which demonstrated Factor VIII expression in the therapeutic range in an ongoing NHP study. Furthermore, we see an opportunity to leverage our Hemophilia A program approach as a platform for additional indications requiring large gene integrations. Our updates regarding our base editing systems and RIGS at the American Society of Gene and Cell Therapy Annual Meeting exemplify our leadership in precision genome editing and complex, large genome corrections. In addition, we are thrilled to have recently regained full rights to our base editing and RIGS technology, and we plan to advance these technologies in indications with significant unmet need, such as Alpha-1 antitrypsin deficiency and Wilson’s disease, either on our own or in conjunction with potential partners.”
Despite the resignation of Chief Scientific Officer Luis Borges, H.C. Wainwright maintained a Buy recommendation on Metagenomi, Inc. (NASDAQ:MGX) in July with a $10.00 price objective. The company’s pipeline and financial stability are what motivate H.C. Wainwright to have faith in Metagenomi, highlighting the significance of the impending NHP results. The company also emphasized how Metagenomi’s genome modifications are based on metagenomics studies, highlighting MGX’s extensive genomic alteration toolbox.
On the other hand, once Metagenomi’s collaboration with Moderna (NASDAQ) ended, JPMorgan downgraded the company from Overweight to Neutral and decreased the price objective from $16.00 to $6.00. Notwithstanding this setback, the firm recognized that it was continuing to collaborate with Ionis and other near-term catalysts, but advised caution until more distinct execution capabilities and a clear route to clinical testing were shown.
Overall, the analysts propose a “strong buy” rating. Analysts’ average price goal of $17.83 suggests a potential profit of 392.54% from the current stock price of $3.62.
Investors are keeping a careful eye on Metagenomi’s pipeline advancements and milestones, as seen by the divergent opinions expressed by H.C. Wainwright and JPMorgan.
Overall MGX ranks 4th on our list of the best new penny stocks to buy. While we acknowledge the potential of MGX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MGX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
Disclosure: None. This article is originally published at Insider Monkey.
