Pfizer (PFE), one of the world’s largest pharmaceutical companies, will release its third quarterly report on October 27 before the US market opens. In the last 4 quarters, except for Q4 2019, its reports performed much better than expected. However, it seems that after technology companies, it is now time for healthcare and pharmaceutical companies to take advantage of this situation, even if the main winners in the short term will be the companies who are first to come up with a COVID-19 vaccine.
The company’s latest results, released on July 28 2020, confirmed $0.78 earnings per share for the second quarter of 2020, improving on analysts’ consensus estimate at $0.64 by $0.14. Tomorrow’s report will be for the fiscal quarter ending September 2020. According to Zacks Investment Research, the EPS consensus forecast for the quarter is $0.70, according to 4 analysts. The EPS report for the same quarter last year was $0.75. (1)
While in the third quarter, stock prices rose 12.17%, the overall value of healthcare industry stocks rose 1.86% overall (check the statistics below from Finviz.com). The Pfizer stock price closed at $38.19 last Friday, October 23. This is only 1.27% higher than the opening price of the year and 6.65% lower than the highest price of 2020 at $40.96.
What should we look closely at in this report?
As you know, earnings reporting is not just about EPS (earnings per share); it is very important for investors and traders to see the total income and net income, as well as the company’s outlook for the next quarter. In the second quarter, EPS data was better than expected in most corporate reports, but there was an important reason for that – low market expectations due to the epidemic having had the most impact in the second quarter.
Going back to the healthcare industry, and in particular to Pfizer, one of their best-selling products are vaccines, and when we do not yet have the coronavirus vaccine to sell, it is important to check the numbers in this section.
At Biopharma Group, the Zacks Consensus estimates for oncology and vaccine products are $2.78 billion and $1.9 billion, respectively. The Zacks Consensus for the Upjohn Group is estimated at $1.91 billion. (2)
Summary:
Zacks ranks Pfizer at #3 (Hold), which makes sense, while better-than-expected data could still push stock prices, but all eyes will be on the third week of November, when the company has announced it will apply for the US license to release its COVID-19 vaccine.
Technical overview
The weekly chart has clearer data to review. The stock price is above the downtrend line, after recovering from the lowest price of 2020, i.e. $27.50 (March 22), and reversing the downtrend, which started from the highest price of 2019 at $44.64 and accelerated following the coronavirus crisis. The price is clearly above the key level of 61.8% Fibonacci and has been traded above it since July.
A price stability above this level at $35.90 has made this level an important support level, while the highest price of $40.96 in 2020 is currently the key resistance. Positive reports plus news about vaccine production could open the door for the highest price of 2019 at 44.64, while any negative reports and news about its vaccine production, at least in the short term, could return it to the general downturn that began in 2019. After the key support of $35.90, $34.36 (50% Fibonacci level) is the next support.
¹Zacks Equity Research
²Zacks Equity Research
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Ahura Chalki
Market Analyst
Hot Forex
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