Is Altimmune (ALT) stock a good buy after the 306% jump?

Altimmune (NASDAQ: ALT) stock proce has staged a strong recovery in the past few days, making it one of the most popular companies among day traders. The shares jumped to a high of $8.63 on Thursday, about 306% above the lowest point this year, giving it a market cap of over $353 million.

Strong obesity drug demand

The weight loss industry has been one of the most popular ones in 2023. In this period, companies like Eli Lilly and Novo Nordisk have done so well that they are valued at almost $1 trillion.

Altimmune is a smaller company than these giants that is attempting to gain market share in the industry. It is a clinical-stage biopharma company that is developing drugs for obesity and liver diseases. Its lead product is known as pemvidutide, which is used to treat obesity and non-alcoholic steatohepatitis.

Altimmune stock price has surged in the past few days as investors cheered the progress in the company’s research. In November, the company published positive results for its Phase 2 trial for the pemvidutide drug. At 2.4 mg doses, patients lost about 15.6% in the first 15 weeks. 

This means that the company has more potential as it moves to the third stage of testing. In a note after the study, an analyst at JMP said that the drug was better than Wegovy, the popular drug made by Novo Nordisk. The statement said:

“Pemvidutide has a competitive profile based on the top-line MOMENTUM data with greater weight loss than semaglutide, better lipid changes and tolerability than tirzepatide, and better cardiac safety than retatrutide.”

Still, the challenge for Altimmune shareholders is that the stock surge could lead to dilution in the coming months. Altimmune has a track record of dilution since its outstanding shares have jumped from 1.67 million in 2016 to over 50 million today.

Its recent results showed that the company had an active at-the-market shelf offering of $135 million, a huge number for a company valued at $353 million. The other risk is that the company is in a market that is getting saturated with products by companies like Lilly, Novo Nordisk, and Viking Therapeutics.

A likely potential catalyst for Altimmune is that it could become a takeover candidate if it can prove that its product works. Pfizer would be a good company now that its candidate has imploded.

Altimmune stock price forecast

ALT chart by TradingView

The daily chart shows that the ALT share price has jumped sharply in the past few days. Along the way, the 50-day and 100-day moving averages have made a bullish crossover, which is a bullish sign. It has also moved above the key resistance point at $6.03, the highest swing on April 18th.

Therefore, I suspect that Altimmune share price will stabilise in the coming weeks and possibly retest the support at $5 as the momentum eases. More upside will only be confirmed if the stock moves above this week’s high of $8.60.