On Tuesday, Adagio Therapeutics Inc. (NASDAQ:ADGI) shares skyrocketed by more than 35% before declining for a mid-day net gain of about 4.5%. The rally was fueled by social media chatter, which saw trading volume surpass 10 million for the second consecutive day.
The stock spiked more than 86% on Monday after CEO Tillman Gerngross said its covid antibody was specifically designed to remain effective against variants.
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Speaking to CNBC, Gerngross said early signs indicate that the antibody will be able to counteract the Omnicron strain, which has sparked concerns amid fears current vaccines may not be effective against it.
“Our antibody, based on a sequence analysis, is likely to bind to Omnicron and not lose any of its neutralization potency,” he said.
Is it too risky to bet on Adagio stock?
From an investment perspective, Adagio shares trade at a reasonable P/B ratio of 4.53. In addition, the company enjoys solid liquidity ratios, thus making it an interesting option for value investors.
However, with analysts expecting its bottom line to worsen by more than 40% next year, it may be best to monitor performance before betting on the stock.
Therefore, given its post-listing spike of more than 6,500%, it could be time to take some profits.
Technically, Adagio shares seem to be trading within a sharp;y ascending channel formation in the intraday chart. As a result, it has rallied deep into overbought conditions.
Therefore, investors could target potential technical pullbacks at about $33.69, or lower at $17.91, while $63.10 and $78.85 are crucial resistance zones.
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