Is it safe to buy Anavex shares after matching earnings expectations?

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on Nov 25, 2021
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  • Anavex Life Sciences shares on Wednesday surged 5.68% after releasing its annual results.
  • The company announced its FY2021 results before markets opened, matching earnings expectations.
  • Cash and cash equivalents increased by $122.9 million to $152.1 million.

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On Wednesday, Anavex Life Sciences Corp (NASDAQ:AVXL) shares rallied 5.68% after reporting its most recent annual results. The company announced its full-year 2021 results before markets opened, matching the consensus expectations on earnings.

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Anavex Life Sciences posted FY2021 GAAP earnings per share of -$0.54, in line with expectations. On the other hand, its FQE EPS of -$0.16, was slightly below the estimate of -$0.15, while cash and cash equivalents increased by $122.9 million to $152.1 million.

Is Anavex too risky to buy?

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From an investment perspective, Anavex shares trade at a steep P/B ratio of 8.52, making it less attractive to value investors. In addition, analysts expect the company’s bottom line to improve by 16% this year before declining by more than 20% next year.

Therefore, although the stock has rallied nearly 260% this year, it looks more attractive to short-term investors, with a significant pullback potentially on the horizon.

Source – TradingView

Technically, Anavex shares seem to be trading within a descending channel formation in the intraday chart. In addition, the stock recently bounced off the trendline support to rally towards the trendline resistance.

However, with the stock still far from reaching overbought conditions, investors could target extended gains at about $20.43, or higher at $22.07. On the other hand, if the trendline resistance triggers another pullback, it could find support at around $17.41, or lower at $15.59.

In summary, although Anavex shares seem steeply valued, it could still be an exciting short-term buy.

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