Should you chase the rally in PAVmed stock after it quadrupled on Wednesday?

PAVmed Inc (NASDAQ: PAVM) shares more than quadrupled on Wednesday after the company’s subsidiary – Lucid Diagnostics – secured a major contract from the US government.

According to PAVM’s press release, the US Department of Veterans Affairs (VA) has joined forces with Lucid to widen access to its EsoGuard Esophageal DNA Test across the VA healthcare system.

PAVM stock, however, has reversed much of its intraday gains in recent hours and is now trading more than 45% below its 52-week high.

Why did PAVmed stock soar on Lucid Diagnostics new contract?

The VA contract represents a significant milestone for Lucid Diagnostics, and – by extension – for PAVmed stock.

EsoGuard is designed to detect esophageal precancer, a condition that’s often overlooked until it’s evolved into a more serious disorder.

By securing access across the VA healthcare system, Lucid gains a large, captive patient population and the credibility of working with one of the nation’s largest healthcare providers.

The deal could accelerate EsoGuard adoption, boost reimbursement visibility, and serve as broader validation of the company’s technology.

For PAVmed, which has struggled to gain traction, the announcement provides a rare catalyst that signals real-world demand may finally materialize. That’s why investors cheered the biotech stock today.

Here’s why PAVM shares remain unattractive to own in 2026

Beyond the headline excitement, however, PAVmed’s fundamentals narrate a much more sobering story. The company has a “history” of heavy cash burn, limited revenue, and recurring dilutions to fund operations.

Even with Lucid Diagnostics new partnership with the Veterans Affairs department, monetization will take time – and the path to profitability remains uncertain.

Additionally, valuation is another major red flag on PAVmed shares. Following a more than 300% increase on January 21st, the company’s market cap now reflects expectations far beyond its current financial reality.

PAVM may see accelerated profit-taking following this rally, especially since its near-term relative strength index (RSI) now suggests overbought conditions.  

Note that the company has dipped below its 200-day moving average (MA) again in recent hours, reinforcing that the broader downtrend remains intact.

The risk of chasing the rally in PAVmed today

Today’s explosive move in PAVM bears all the hallmarks of a meme-like surge – a “thinly” traded stock, a splashy headline, and retail traders piling in.

History shows such rallies typically end in sharp reversals once the initial euphoria fades.

Chasing momentum at inflated levels often exposes late investors to extreme volatility and potential wipeouts. Without sustained revenue growth or clear profitability, PAVmed is vulnerable to a huge correction.

For disciplined investors, the lesson is rather clear: headline-driven rallies can be seductive, but they rarely reward those who buy late.

Unless PAVmed proves it can translate contracts into meaningful earnings, the risks of chasing this rally outweigh the reward.

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