Trade of the Day: Pfizer’s Chart Does Not Look Healthy

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Pfizer Inc. (PFE) — This leading global drug company has suffered from revenue declines since 2010. This year, S&P Capital IQ Equity Research forecasts sales will fall another 7.3% to $46 billion, including a $2.9 billion loss due to foreign exchange and a $3.5 billion loss resulting from drugs coming off patent.

In February, Pfizer agreed to acquire Hospira for $17 billion. Capital IQ is of the opinion that Pfizer significantly overpaid for the generic injectable drug maker, with the acquisition price valuing the stock at 38.5 times its 2015 earnings estimates compared with the stock’s five-year range of 7 to 25 times earnings.

Analysts’ consensus estimate is for full-year earnings to fall 7.5% to $2.09 per share.

PFE stock has traded in a flat line for most of 2015. However, after hitting a new high above $36 in late July, shares plunged below $29 on Aug. 24.

A rebound from that low appears to have stalled above the 200-day moving average at $33.89, and Tuesday’s outside reversal may have signaled the demise of the recovery. High-volume selling, a bearish horn formation and a death cross all point to lower prices.

Sell PFE stock if you own it or sell shares short at $33 with a price target of $27 for a potential 18% return.

Short sellers should enter a stop-loss order at $35 and check with their broker for any unusual restrictions. Also, be aware that if you hold shares short though the company’s ex-dividend date on Nov. 4, you will be required to pay the quarterly dividend of 28 cents per share to the owner of the stock.

PFE Stock Chart
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Article printed from InvestorPlace Media, https://investorplace.com/2015/10/pfizer-inc-pfe-stock-trade-of-the-day/.

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