Pfizer Inc. (NYSE:PFE) — I last reviewed PFE stock as the Trade of the Day on April 1, following a buy signal from my proprietary internal indicator, the Collins-Bollinger Reversal (CBR). It was the second signal in two weeks, so I recommendation traders buy shares around $29 with a target of $34. That target was hit on May 24, providing a return of more than 15% in less than two months.
Since then, shares have run to a new all-time high just under $37 on Thursday. So, the question is, what to do now?
S&P Capital IQ Equity Research rates PFE stock a “Buy” with a 12-month fundamental target of $40. Its analysts expect sales to jump 7% in 2016 to $52.3 billion, helped by the 2015 acquisition of Hospira and strong sales of two key drugs. They estimate earnings of $2.44 per share in 2016 and an increase to $2.58 per share in 2017.
Turning to the chart, we see that following the twin CBR buy signals under $30, PFE stock verified a long-term bull market was in place with a golden cross in May. A breakout from a triple-top led to a new all-time high of $36.96 on Thursday (the previous high was $36.46, made in July 2015).
Initial support is at the breakout line at about $35.50, and then the 50-day moving average at $34.58. MACD is currently overbought with average volume.
Long-term investors should continue to hold PFE stock for even higher returns and income (Pfizer pays an annual dividend of $1.20 per share for a forward yield of 3.3%). But they should protect their profits with a stop-loss order at $36 or by writing long-term call options.
A round of profit-taking may provide a new entry point for current shareholders and new buyers under $33.
