Viking Therapeutics Faces Critical Technical Challenge

The stock of Viking Therapeutics Inc. VKTX is approaching a significant moment as it hovers just above a potential death cross.

This technical pattern occurs when the 50-day moving average falls below the 200-day moving average, which is typically viewed as a bearish indicator. Although it’s not confirmed yet, the stock’s current trajectory suggests increased pressure, especially as Viking has faced challenges in recent months after some earlier gains.

Chart created using Benzinga Pro

Related: Biden Proposes Medicare, Medicaid Access For Popular Weight-Loss Drugs

VKTX Stock: A Shift from Growth to Decline

Earlier this year, VKTX stock rose sharply due to enthusiasm for its weight-loss drug program. However, this excitement has waned, with the stock dropping 25.69% in the past month and 14.57% over the last six months.

Currently trading at $54.51, the stock is below its 20-day and 50-day simple moving averages of $58.72 and $63.04, indicating a bearish trend.

In contrast, Viking’s 200-day simple moving average is at $62.73, which creates a narrow gap and suggests that the death cross may soon be realized. This technical weakness is also highlighted by a negative Moving Average Convergence Divergence (MACD) at -3.68 and a Relative Strength Index (RSI) of 42.11, suggesting the market is losing its bullish momentum.

Facing Tough Competition

Concerns are mounting among analysts regarding Viking’s ability to compete in the lucrative obesity drug market, where major players like Eli Lilly and Co LLY and Novo Nordisk AS NVO dominate.

Though there are promising signs from Viking’s weight-loss drug candidates, ramping up production for both oral and injectable formats may prove to be expensive and time-consuming, which could limit near-term possibilities.

Future Outlook: A Key Technical Test

The impending death cross signals broader challenges for Viking, as investor confidence diminishes in light of sector-wide issues. Nonetheless, the stock could stabilize if the company announces positive clinical results or strategic developments in its weight-loss programs.

Investors are now focused on the charts as VKTX approaches a critical technical juncture.

Will it find support, or will the feared death cross be confirmed? Investors are keeping a close watch.

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