23ANDME Stock is Priced for Opportunity

Consumer genetic and research company 23ANDME NYSE: ME stock is attempting to find a bottom after making new lows. The Company has expanded its direct-to-consumer (DTC) products from ancestry discovery tools to DNA-based and health insights based on its easy-to-use swabs kits to collect genetic data. The more its products are used, the more data populates its platform. The Company is also partnered with GlaxoSmithKline (NYSE: GSK) on its GSK’608 anti-CD96 immunology therapeutic which included a $300 million equity investment. The Company has a database of over 10 million genotype customers and still growing. This data is tremendously valuable and synergistic across both Consumer & Research and Therapeutics segments. In addition to providing personal reports, the Company is also on the forefront of new drug discoveries and novel consumer therapeutic products spreading across 40 different specialists including Immunocology, cardiology, immunology, neurology, gynecology, metabolic disorders, and infectious diseases. The Company is uniquely positioned as both a pandemic and post-pandemic reopening play. Prudent investors seeking exposure in a leading DTC genomics and therapeutics segment play can watch for opportunistic pullback entries in shares.

Q2 FY 2021 Earnings Release

On Aug. 13, 2021, 23ANDME released its fiscal third-quarter 2021 results for the quarter ending June 2021. The Company reported net loss of (-$42 million) compared to a net loss of (-$36 million) in year-ago period. Total revenues were $59 million, up 23% year-over-year (YoY). The Company expects full-year 2022 revenues to range from $250 million to $260 million with adjusted EBITDA loss in the range of (-$143 million to -$158 million). The Company completed its reverse merger with VG Acquisition Corp (Richard Branson’s SPAC). The Company expanded its database to 11.6 million genotyped customers and launched three new reports for subscribers. 23ANDME CEO Ann Wojcicki commented, “We believe that genetic information is the future of personalized medicine. Our unique research platform enables our customers to actively participate in our efforts to make new genetic discoveries and achieve our goals of helping people live healthier lives and to further advance our drug development efforts.”

Conference Call Takeaways

CEO Wojcicki set the tone, “The size and scale of our unique database enables us to use genetics to transform how we diagnose, treat, and prevent human diseases. Capitalizing on the momentum we built as a private company, we recorded a solid start to fiscal year 2022 with Q1 revenues as $59 million, up $11 million or 23% versus the prior year Q1. Steve will cover the numbers in more detail.” She continued, “We also recorded several important milestones on the consumer side. We grew our genetic database to 11.6 million genotype customers, further increasing the value of our premier re-contactable database. We also launched three new health reports in the first quarter of our 23andMe+ members. 23andMe+ is our premium content subscription service, launched late last year that provides subscribers with unique and new reports and features through the course of their subscription, giving them even deeper insights into their health.”

Database Growth and GSK Collaboration

CEO Wojcicki provided more details, “Our premiere database combined with greater than 4 billion phenotypic data points, we have a map, gives us the statistical power to generate these PRS reports. In addition to our new reports, we also published key genetic research over the past quarter. This includes our own research on a genetic link tied to loss of smell that is found in some individuals diagnosed with COVID-19, as well as research we’ve published in collaboration with academic institutions. Just this quarter, our published research spans the genetics of allergies, cataracts, depression and even how we use genetics to study rare diseases. If you’re interested in learning about the new reports and the research we publish, I encourage you to follow our blog at blog.23andme.com. We also continue to make progress with our pipeline of therapeutic program. Our collaboration with GSK continues to be very productive. We have over 40 programs in various stages of research and development. Our most advanced program is currently in a clinical trial and another is expected to start in the clinic by the end of March next year.” 

Broker Upgrades

On Aug. 17, 2021, Credit Suisse started coverage with an Outperform rating and a $13 price target. It joined Citigroup’s coverage of a Buy rating with a $14 price target on July 12, 2021.

ME Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames provide a broader view of the price action playing field for ME stock. The weekly rifle chart downtrend stalled out as the 5-period moving average (MA) resistance at $8.43 went flat possible attempting a channel tightening to the 15-period MA near the $10.02 Fibonacci (fib) level. The weekly stochastic is attempting to cross up through the 10-band. The daily rifle chart is further along in its attempt to bottom out as the 5-period MA slopes up at $8.06 and 15-period MA at $8.31 fib. The daily stochastic has a bullish mini pup with a daily market structure low (MSL) buy trigger on the break through $8.83. The daily upper BBs sit at $9.40. Prudent investors can monitor for opportunistic pullback levels at the $8.31 fib, $7.65 fib, $7.31 fib, $7.01 fib, $6.63, $6.31 fib, $5.94 fib, and the $5.55 fib. The upside trajectories range from the $10.88 fib to the $14.22 fib.

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