Tuesday, 27 June 2017

APDN: The Next Multi-Day Runner Like RWLK, AVEO, MARA or DCTH

NASDAQ-listed penny stocks have been on a tear over the last few days, particularly those that have broken out from a long-term downtrend like ReWalk Robotics Ltd. (RWLK), AVEO Pharmaceuticals, Inc. (AVEO), Marathon Patent Group, Inc. (MARA) and Delcath Systems, Inc. (DCTH). One that looks like it will follow these stocks with a multi-day run is Applied DNA Sciences, Inc. (APDN). It rose 28% to $1.40 on volume of just under a million shares, breaking out from the $1.20 resistance on Monday. APDN's move was a response to the positive news release on Friday:

Applied DNA Sciences, Inc. (“Applied DNA,” “the company,” NASDAQ: APDN), is pleased to announce it has received an order to tag 27.5 million pounds of cotton to kick off the 2017/2018 ginning season, composed of three US cotton varietals. The three varietals are Pima, Delta and Acala, which fall under the Pimacott®, HomeGrown™ LoneStar™ and HomeGrown Acala™ programs. The company expects to ship SigNature® T DNA to mark 27.5 million pounds of cotton before the end of June.

“Now in our third season, Applied DNA’s SigNature T DNA has been meeting the need for supply chain traceability, transparency and trust within the cotton industry ecosystem with national retailers, their supply chain partners, and consumers. We are proud to continue to tag, test and track cotton for the 2017/2018 ginning season.” stated Dr. James A. Hayward, President and CEO of Applied DNA. “This order demonstrates our success in further entrenching SigNature T DNA in an established revenue-generating vertical and in extending the adoption of our proven technology platform. Although we cannot predict the timing of follow-on orders, conversations with our customers lead us to believe that additional opportunities to tag cotton during the 2017/2018 ginning season are likely.”

For this order, the customer has agreed to more customary and favorable payment terms, allowing for earlier revenue recognition than past cotton orders. This new order is incremental to DNA concentrate to tag 30 million pounds of cotton that was shipped during fiscal 2016 to establish an on-site reserve of SigNature T DNA before the harvest begins.

APDN is a molecular-based technology solutions company that helps to protect products, brands, entire supply chains, and intellectual property of companies, governments and consumers from theft, counterfeiting, fraud and diversion.  The fact that APDN has been asked to tag cotton for the third season and is receiving better payment terms and follow-up orders is indicative of the company's customer being satisfied with APDN's DNA authentication service. The business appears to be gaining a lot of traction as revenue increased 58% last quarter. Based on the trading pattern of the aforementioned stocks, some of them having moved without news, we believe that APDN will hit $2.00 shortly, possibly on Tuesday.

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Disclosure: We are long APDN

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