This article was originally published on Opto – Understand What Really Moves Markets.
Positive progress on vaccine trials has seen Pfizer’s share price shoot up, only to quickly decline again. Adding to the mix is Pfizer’s CEO, who sold $5.6m of his own shares on the day of the announcement, as reported by The Guardian.
However, with the pharmaceutical corporation becoming the first company to apply for US emergency use of its COVID-19 vaccine on Friday, is Pfizer’s share price on the way up?
What’s happening with Pfizer’s share price?
Pfizer’s share price opened 15% higher at $41.94 on 11 November, the day the drug manufacturer announced its vaccine was 90% effective in initial stage three trial results. The same day, Pfizer CEO Albert Bourla sold 132,508 of his shares at the day’s opening price, according to an SEC filing.
As The Guardian highlights, Pfizer’s share price was close to the $41.99 52-week high the stock hit on 9 November. It also represents 62% of Bourla’s stake in the company.
This will have certainly raised a few eyebrows, even as Pfizer said the sale was a result of the stock hitting a price target set in August.
“The sale of these shares is part of Dr Bourla’s personal financial planning and a pre-established (10b5-1) plan, which allows, under SEC rules, major shareholders and insiders of exchange-listed corporations to trade a predetermined number of shares at a predetermined time,” Pfizer said in a statement.
By Tuesday the following week, Pfizer’s share price had shed those gains and was trading at circa $35. Since then, the stock’s volatility has been driven by further announcements regarding vaccine treatments.
On Thursday 18 November, the stock shot up 3.1% in early morning trading following the announcement that its vaccine was 95% effective in the trial’s final results. Friday’s announcement of Pfizer’s application to the FDA for emergency approval delivered another boost of adrenaline, with the stock up over 3% in the morning session.
How has Pfizer’s share price performed over the long-term?
What is clear is that, while the trial announcements are delivering a short, sharp shock to Pfizer’s share price, the gains are temporary. The stock is currently trading around the same point it was in the summer. Year to date, Pfizer’s share price is actually trading down just over 1.02% (as of 20 November’s close). Over a two-year period, the stock is down over 10%, having failed to recover from a selloff in July last year.
So, why the sluggish performance? One possible reason is Pfizer’s agreement to supply the vaccine at a discount in the US. Vaccines typically have lower margins than prescription drug treatments. There is also competition from Moderna [MRNA] to contend with, which has itself released promising trial data.
How to trade Pfizer’s share price?
For traders looking for a growth stock, there are other options out there. For example, Moderna’s share price is up 37% this past month, and 223% this year.
That doesn’t mean Pfizer should be discounted, though. Longer-term investors will be interested in its 4.20% forward yield, strong profit margin and relatively low profit to 12.81X price to earnings ratio. Moderna, on the other hand, carries a 22.49X ratio, 242.34% profit margin, and no dividend. Those looking to profit from Pfizer’s share price in the short term might have to buy the dip.
Among the analysts tracking the stock on Yahoo Finance, Pfizer’s share price is $41.78, which would represent a 13.8% upside on the current price (as of 20 November’s close). Of the 22 analysts offering recommendations, one rates Pfizer a Strong Buy, while 11 rate it a Buy.
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