Dynavax Technologies Corporation (NASDAQ: DVAX) is a clinical-stage immunotherapy company. The Company is focused on leveraging the body's innate and adaptive immune responses through toll-like receptor (TLR) stimulation

Why Investors Should Book Profit?

• Stock is in Overbought Zone: The leading momentum indicator, the 14-day RSI is hovering in a steep overbought zone at 79.3, which indicates that stock could consolidate in near term. The company’s shares reported a stellar rally after Medigen received approval of its COVID-19 vaccine, “MVC-COV1901”. MVC-COV1901 is a subunit vaccine with recombinant S-2P antigen adjuvanted with CpG 1018 supplied by Dynavax.

• Stock Breached Upper Bollinger Band©: Given the strong rally in the DVAX stock price, it shares have breached the upper Bollinger Band, which indicates a deviation of more than 2x from the 20-day SMA. This generally indicates a potential consolidation in the stock in the near term.

Technical Price Chart (as on September 01, 2021). Source: REFINITIV, Analysis by Kalkine Group

• New Mutant of COVID-19 Vaccine: Even vaccines of large giant pharma companies are not so effective in case of Delta variant of the COVID-19, which led them to bring second generation vaccine to deal with the novel virus. So Medigen vaccine could also face some resistance from people if it don’t work out well. Also, people are more inclined to take vaccines of the large and giant pharma companies who are having decades of track record in Pharma business and carrying sizeable research and development activities.

• Stretched Valuation: From the NTM Price to Earnings multiple standpoint, its shares are extremely overvalued against its competitors. The stock is even trading at a forward multiple which is much higher than some of large giant player’s multiple i.e., Gilead Sciences Inc and Regeneron Pharmaceuticals Inc. This indicates that in mid-term to long-term, valuation of DVAX has to come down.

Stock Recommendation: Given the extremely stretched valuation of the company and technical indicators which are indicating a potential consolidation in the stock, we recommend a “Sell” rating on the stock at the closing price of USD 19.0 on September 01, 2021. 

1-Year Price Chart (as on September 01, 2021). Source: REFINITIV, Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

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