Pfizer Stock Up 6% Today – Time to Buy PFE Stock?

The price of Pfizer stock is surging 6% in pre-market stock trading action this morning following news about a threatening new variant of COVID-19 found in multiple Southern Africa countries.

Market participants appear to expect that higher vaccine sales could keep lifting the performance of pharmaceutical firms that have developed these treatments including Pfizer (PFE) and Moderna (MRNA).

Pfizer shares accumulate a 16.5% gain so far in November after the company beat analysts’ estimates for its Q3 2021 earnings and revenues.

Additionally, Pfizer’s Comirnaty COVID-19 vaccine developed alongside BioNTech has been approved to be administered to children older than 5 years by multiple countries including the European Union and the United States and that should result in higher revenues for the New York-based pharmaceutical company.

It is important to note that Pfizer’s COVID vaccine is the only one that has received the nod from the US Food and Drug Administration (FDA) to be administered to the youngest cohorts while Moderna’s and J&J’s treatments have only been approved for individuals of 18 years or older.

What can be expected from Pfizer stock as we head to the end of 2021? In this article, I’ll be analyzing the latest price action and fundamentals of this healthcare stock to outline plausible scenarios for the future.

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Pfizer Stock – Technical Analysis

Earlier this month I set forth a $52 target for Pfizer stock after the post-earnings uptick that took place on 5 November when the stock went up as much as 11% in a single day.

That target was hit only 14 days after but the price has retreated in the past few days to end at $50.9 per share yesterday. Multiple factors currently favor a bullish outlook for PFE stock.

First, the price is already breaking past the $52 level in pre-market action today amid the possibility that the company will keep benefitting from the pandemic if new variants keep emerging.

Moreover, a bullish gap emerged during the 5 November session and this technical variable should keep supporting the rally for a while – at least until the impact of COVID vaccines on Pfizer’s top and bottom line starts to fade.

With this in mind, the outlook for Pfizer stock is bullish with a new target set at $59 per share resulting in a 16% upside potential based on yesterday’s closing price.

That said, there are some technical signals that investors should keep an eye on. First, momentum indicators are quite stretched at the moment with the Relative Strength Index (RSI) already hovering near overbought levels.

Meanwhile, the MACD is surging to the highest level since August this year back when the stock surged to $52 for the first time. Additionally, Pfizer is trading 23.5% above its 200-day simple moving average.

The appearance of a bearish divergence in momentum oscillators may point to the start of an exhaustion in this latest rally and traders should adopt a more cautious approach when that happens.

On the other hand, the fact that the stock is so extended from its 200-day SMA increases the risk of a sharp correction down the road.

Overall, the short-term outlook is bullish but the mid-term outlook calls for some profit taking as most of the contribution of higher vaccine sales to Pfizer’s financial performance may have already been priced into PFE stock.

Pfizer Stock – Fundamental Analysis

Earlier this month, Pfizer raised its guidance for its FY 2021 EPS both including and excluding the expected contribution of its Comirnaty vaccine.

The pharmaceutical company is currently forecasting adjusted EPS of $4.13 to $4.18 for the year including the treatment along with ex-Comirnaty EPS estimates ranging from $2.6 to $2.65.

If we use that ex-Comirnaty forecast as guidance to establish forward valuation multiples for the firm, we would get a forward P/E of 19 for PFE stock based on yesterday’s closing price of $50.9 per share while its dividend yield stands at 3%.

That said, vaccine sales will not just evaporate after the pandemic is over. In fact, this latest variant is proving that the virus can keep mutating and that supports the view that Pfizer will continue to benefit from the sale of Comirnaty in the future.

Even though it is highly likely that the firm will see its sales decline at some point down the line when vaccine revenue comes primarily from booster shoots and first doses to babies, Pfizer is still being valued conservatively if one fully excludes the impact of Cominarty in its bottom-line results.

Meanwhile, the company’s dividend is quite attractive and more stable than ever amid a significant increase in its free cash flows. That could create room to further increases in PFE’s dividend that could possibly boost the stock price as well.

Overall, both the technical and fundamental analysis point to a bullish outlook for Pfizer amid the pandemic tailwind and even after the health contingency stops dominating the headlines.

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