Is Pfizer a Buy at These Prices?

With shares of Pfizer (NYSE:PFE) trading around $27, is PFE an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Pfizer is a biopharmaceutical company that discovers, develops, manufactures, and sells medicines for people and animals worldwide. The company manages its operations through five segments: Primary Care; Specialty Care and Oncology; Established Products and Emerging Markets; Animal Health and Consumer Healthcare, and Nutrition. Pfizer’s main products include human and animal biologic and small molecule medicines and vaccines, nutritional products, consumer healthcare products, and products for the prevention and treatment of diseases in livestock and companion animals. Illness and disease is something that plagues people and animals around the world. Pfizer is in constant development attempting to improve its products in order to help people and animals struggling around the world. So long as health is a main concern for people and animals, Pfizer stands to see significant profits.

T = Technicals on the Stock Chart are Strong

Pfizer stock has been on a powerful run over the last several years that has taken the stock to multi-year highs. The stock is currently consolidating after a period of rising prices so it may need some rest here. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Pfizer is trading around its rising key averages which signal neutral price action in the near-term.

PFE

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(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Pfizer options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

Pfizer Options

23.64%

90%

89%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

July Options

Steep

Average

August Options

Steep

Average

As of today, there is an average demand from call buyers or sellers and high demand by put buyers or low demand by put sellers, all neutral to bearish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bearish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

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