Pfizer Inc.: PFE Stock Should Finally Punch Its Way Higher

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Shares of global pharmaceutical giant Pfizer Inc. (NYSE:PFE) dropped Tuesday after the company issued a weaker-than-expected outlook for 2015. However, PFE stock remains constructively positioned through at least a multimonth lens, and it might be worth watching for relative strength — particularly if and when the broader market sees a better correction in the first half of the year.

beat the bell stock investing advicePfizer reported fourth-quarter earnings of 54 cents per share, up 39% year-over-year and beating estimates by a penny. Meanwhile, sales came in at $13.12 billion to top the consensus. Also of positive note: Pfizer bought back $1.2 billion worth of PFE stock in Q4.

But the issue came in Pfizer’s outlook. PFE now projects 2015 earnings to come in a range of $2 to $2.10 on revenue of $44.5 billion to $46.5 billion; analysts expected EPS of $2.10 per share on revenue of $47.4 billion.

As I have discussed several times in this column in recent months, healthcare is one of the better-looking sectors right now, and it’s feasible to expect outperformance in coming months. To be clear, when markets correct, they tend to take everything lower, so this isn’t to say that healthcare or PFE stock specifically would be a safe haven in such a situation. But since this is a game of odds, it pays to focus on stocks that stand a abetter chance than others to hold up.

PFE Stock Charts

Looking at the multiyear weekly chart, we see that since spring 2013, PFE stock has largely found itself in a bigger-picture sideways motion whereby it consolidated its 2011-12 rally. After revisiting the lower end of this range in October, Pfizer has since rallied sharply and worked its way back to the upper end of the range.

Given that this consolidation phase has been in the making for nearly two years, one would expect that a break out of this range to the upside would take several attempts.

pfe stock charts weekly
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On the daily chart, we see that PFE stock has worked its way higher in a steady way during the past couple months, and since early January, Pfizer has consolidated in a tight range near its March 2014 highs.

The bears will point out that the stock has rejected a breakout attempt twice in recent days — once on Jan. 21 and again on Jan. 27, after the Pfizer earnings report. However, PFE stock still is consolidating in a tight fashion at these highs, and odds favor an eventual break higher.

PFE stock charts daily
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Active traders and investors could look out for a daily close above the $33.15 area, which may then lift PFE stock into the $34.50 area as a next upside target.

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Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.

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