Incannex Healthcare Limited (ASX: IHL)

Listed in 2007, IHL is an Australian clinical-stage pharmaceutical company, involved in medicinal cannabis products and psychedelic medicine therapies. The current market capitalization as of 15^th February 2022 was reported at AUD 664.69 million.

2QFY22 Financial & Operational Updates – As per the Quarterly Update on 31^st January 2022, dosing of participants for the treatment of obstructive sleep apnoea (OSA) in the phase 2a of IHL-42X got completed and the final clinical results are expected to arrive in 1QFY22. On the other hand, it commenced its preparation of U.S. FDA pre-IND meeting package for IHL-42X. IHL filed form 20-F registration statement for listing on NASDAQ in the U.S. The net cash outflows were reported as ~AUD 2.96 million mainly owing to ~AUD 1.96 million R&D expenditure, which will be eligible for Australian Government R&D Rebate. Its sales receipts for 2QFY22 were reported as nil and closed the quarter with a cash balance of ~AUD 19.77 million at the end of 31^st December 2021 versus ~AUD 22.45 million at the end of 30^th September 2021.

FY21 Top & Bottom Line: As per the annual report released on 7^th September 2021, revenue from ordinary activities increased to ~AUD 1.90 million, showcasing a ~213.7% growth Y-o-Y. While due to increase in Advertising & Promotion costs and research costs, the losses were increased by ~73.8% Y-o-Y to AUD 8.16 million versus ~AUD 3.93 million in FY20.

Technical Analysis: IHL’s stock prices have risen above its 21-period SMA and taking the support of 50-period SMA on a daily chart, indicating a positive indication in its upward movement. Moreover, the RSI (14-period) is also moving upwards from the lower levels and currently placed at ~54.637, supporting the positive momentum.  The immediate support level is at AUD 0.490, while the resistance level is AUD 0.605.

After witnessing substantial increase in its revenue for FY21, quarterly updates, probable NASDAQ listing and current trading levels, investors with a high-risk appetite might consider a ‘Speculative Buy’ position, by keeping the support and resistance levels in mind. The stock was analysed as per the current market price of AUD 0.535, 11:30 AM (GMT+10), Sydney, Eastern Australia as of 15^th February 2022. However, the risk levels are high depending on the successful listing, clinical trials, and FDA approvals.

Daily Technical Chart – IHL

Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest. 

The Green colour line reflects the 21-period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period, then it shows prices are currently trading in a bullish trend, (Vice – Versa).

The Blue colour line reflects the 50-period moving average. SMA helps to identify existing price trend. If the prices are trading above the 50-period, then it shows prices are currently trading in a bullish trend, (Vice – Versa).

The Yellow colour line reflects the Trendline, which shows whether the direction of the scrip is upwards or downwards.

The Purple colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

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