Ocugen Stock Analysis: OCGN spirals down 18.8% as traders sell news of WHO approval

• WHO meeting on Wednesday approved Covaxin for an Emergency Use Listing.
• Ocugen owns rights to distribute Bharat Biotech's COVID-19 vaccine in the US and Canada.
• OCGN stock is down more than 6% in Thursday's premarket.

Though it opened as high as $17.65 on Wednesday on news that its Indian partner had received global emergency use approval by the World Health Organization (WHO) for its COVID-19 vaccine, Ocugen (OCGN) stock was waylaid by traders taking profits. OCGN stock is down 7.3% to $11.80 in Thursday's premarket after diving an astounding 18.8% on Wednesday.

WHO approved the India-based Bharata Biotech's Covaxin vaccine for an Emergency Use Listing (EUL) that will allow it to be purchased and donated to the COVAX facility that distributes vaccines worldwide through the Vaccine Alliance. Ocugen has the rights to distribute it in the US and Canada.

OCGN bounded 12.1% to close at $15.67 on Tuesday, just one day after it pumped 18.1% to $13.98.

OCGN News: Awaiting US, Canada regulators

The WHO's approval of Covaxin will mostly benefit Bharat Biotech, the private Indian company that developed the Whole-Verion Inactivated Vero Cell vaccine. Since Ocugen only owns the rights to distribute the vaccine in the US and Canada, the more significant future dates for OCGN shareholders are when Canada approves its application to distribute it there, and if or when the US Food & Drug Administration approves its phase-3 study. At present, there is no timetable for those decisions, however, so the current market focus on the WHO is the only news to trade on. This creates a cavern in news flow, and enough traders have clearly decided to sell out and return once their is more clarity about those future approvals.

Some observers think the approval of the drug for a EUL signifies a greater likelihood that regulators in the US and Canada will approve it there as well. There is also, however, reason to believe those decisions offer a greater level of difficulty. Covaxin was approved by the Indian government back in January of 2021. At that time, there was not much evidence of its efficacy.

Data released in July based on a study of nearly 26,000 people showed that the vaccine was about 78% effective against symptomatic COVID-19 infections. This is slightly less effective than other US-produced vaccines. Additionally, Canada's population is already 75% fully vaccinated and the US has reached 58%, which may reduce the addressable market under Ocugen's mandate. Many vaccine-skeptical Americans, however, have qualms with the mRNA technology used in other more popular vaccines. Since Covaxin uses an older more common vaccine technology, it may suit those who have so far refused the available vaccines on the market.

OCGN key statistics

Market Cap	$2.5 billion
Price/Earnings	N/A
Price/Sales	N/A
Price/Book	20.2
Enterprise Value	$2.2 billion
Gross Margin	N/A
Net Margin	N/A
52-week high	$18.77
52-week low	$0.27
Short Interest	28.7%
Average Wall Street Rating and Price Target	Hold $8.88

 

OCGN Stock Chart: Where do we land?

This sell-off is precisely what FXStreet has predicted all week. After all, it has happened so many times before. The real question is where OCGN shares find support.

As FXStreet foresaw, OCGN stock closed at resistance on Tuesday at $15.67. From Tuesday's piece: "At Monday’s closing price of $13.98, the clear target is $16.20. This was the swing high from May 3. That spike was much lower than the February 8 spike that went as high as $18.77. The closing prices on those days were quite close – $15.68 and $15.81. This area may also act as resistance as some traders decide to bail."

Wednesday's early session high of $17.65 did in fact clear $16.20 by a wide margin, which may keep the attention of some traders who were brave enough not to abandon ship on Wednesday. It now seems more likely that an approval by Canadian or US regulators (either one) in the coming months could catapult OCGN price above $17.65. If you remember, one negative piece of information was that May's swing high was a full head shorter than that of February. Wednesday's highpoint ended that series of lower highs.

Still, the nearest support level is the 9-day moving average at $11.24. If OCGN price breaks this level, then there is further support at the 21-day moving average at $9.55. This is because this price level coincides with the 61.8% Fibonacci retracement level at $9.51. Long-term support can be found at $6.77.

FXStreet View: OCGN stock is most likely to continue falling. The best option is to wait it out until there is sideways consolidation in OCGN price before wading back into this energetic fellow at a better price level.

OCGN daily chart