No stranger to parabolic runs, Ocean Biomedical, Inc. (NASDAQ: OCEA) stock could be poised for another one this week as the stock is set to be officially included in the Russell 2000 Index on June 26. Such a run could occur due to institutions benchmarked to the Russell 2000 automatically buying shares of OCEA. For this reason, OCEA could be one of the undervalued stocks to watch closely this week in anticipation of a run.
OCEA Stock News
OCEA stock seems to be a runner by almost every metric, the stock has a float of only 3.3 million which allows it to run quickly on news. That was apparent in the multiple runs OCEA stock has made in the last month. Earlier this week OCEA announced a new patent award for its novel cancer immunotherapy treatment which has been shown to suppress primary and metastatic tumor growth in multiple animal models and has potential use in multiple forms of visceral cancers. After this news, OCEA stock jumped more than 136% before settling again.
A few days later, OCEA announced its addition to the Russell 2000 Index, and to no one’s surprise, OCEA stock ran more than 25% again. After the drop from the huge runs OCEA stock has seen the stock may be due to a reversal soon.
The reason a reversal could be soon is the company’s recent $25 million convertible note facility with Alto Opportunity Master Fund SPC where the notes have a conversion price of $10.34 per share which is more than double OCEA’s price at the time of the deal. This funding comes at a crucial time for OCEA since the company only had $306 thousand in cash on hand in its Q1 earnings report.
At the same time, this deal shows that OCEA could be one of the most undervalued stocks since Alto agreed to a conversion price much higher than the stock’s current PPS. In this way, OCEA stock could be worth more than the $10.34 conversion price – making it one of the undervalued stocks worth watching over the coming weeks as the company could announce major news that would send the stock soaring.
*Updated June 25th, 2023
As things stand, OCEA is set to be officially included in the Russell 2000 Index on June 26. This catalyst may have short and long-term implications for the stock. First and foremost the stock is likely to run as a result of a phenomenon known as The Russell Effect. This phenomenon usually occurs with stocks newly included in Russell 2000 as funds that are benchmarked to the index will automatically purchase shares of such a stock – leading to a run due to the significant buying activity.
In terms of long-term effects, OCEA is set to experience a drastic increase in visibility which could lead to more trading volume due to an influx of new investors. Considering OCEA’s extremely low float of 3.7 million, the stock could witness strong runs on news.
Furthermore, Russell’s stamp of approval increases the interest of institutions in a stock, and as a result, more institutions could seek out OCEA stocks as an investment. Overall this inclusion could potentially cause OCEA stock to reach new heights due to a flux of investor and institutional interest – which could make it one of the undervalued stocks to watch this year.
OCEA Stock Financials
In its Q1 2023 report, OCEA’s assets decreased by 83% QoQ from $1.8 million to $0.306 million, and its cash and cash equivalents increased by 900% QoQ from $34 thousand to $306 thousand. OCEA’s total liabilities increased by almost 85% QoQ from $12 million to $23 million.
Operating losses slightly increased by 2.2% YoY from $5.1 million to $5.2 million, including an 88% QoQ decline in research expenses from $3.2 million to $0.393 million, which amounted to a net loss of $67 million – a 1200% increase YoY.
Media Sentiment
@ACInvestorBlog is anticipating OCEA’s inclusion in the Russell 2000 Index.
@TheStockDon believes OCEA could witness a short squeeze.
Technical Analysis
OCEA stock is in a neutral trend and is trading in a sideways channel between $5.90 and $6.85. Looking at the indicators the stock is currently trading above the 200, 50, and 21 MAs. Meanwhile, the RSI is neutral at 64 and the MACD is approaching a bullish crossover. It is worth noting that OCEA recently broke its resistance and is yet to confirm breaking its sideways channel. Moreover, there is a gap near $5.35 that has to be filled.
As for the fundamentals, OCEA has a major upcoming catalyst in its inclusion in the Russell 2000 Index on June 26 which could see the stock soar due to the Russell effect phenomenon. For this reason, investors could wait for a confirmation of breaking the resistance before going long on OCEA stock.
OCEA Stock Forecast
Given the stock’s history of major runs, OCEA could be shaping for a similar run this week upon its inclusion in the Russell 2000 index mainly due to the Russell effect phenomenon and the increased institutional interest accompanied by being included in Russell 2000. Additionally, OCEA has an extremely low float that allows it to run quicker on high volume, and considering the expected volume it might witness, the stock could soar to new highs. All of this makes OCEA one of the most intriguing undervalued stocks to watch closely this year.
If you have questions about OCEA stock and where it could be heading next feel free to reach out to us in our free alerts room!
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