Pfizer stock analysis: will the vaccine cause a price explosion?

The stock price broke out in the first two weeks of November

Pfizer shares broke out on the news that the company saw a 90 per cent efficacy of its vaccine in a phase-three trial. This amazing news was backed up by Moderna’s vaccine news which saw a 94.5 per cent effective rate for its phase-three trial. Both of these companies are producing messenger RNA vaccines that help the body to produce a spiked protein which is very similar to the Covid-19 virus. Once the spike protein is created the T-cells attack the virus and in only 95 cases of 43,000 the virus was seen. 

Historically, Pfizer experienced mixed returns in December after a robust November. While the stock price broke out in the first two weeks of November, there was a lot of profit-taking pushing the shares lower. 

Great day for humanity

Daily life could return to normal if the Pfizer vaccine can be distributed worldwide. Last week, Pfizer and BioNTech (Pfizer’s partner in creating the vaccine) said an early analysis of their vaccine candidate showed it was more than 90 per cent effective in preventing Covid-19 infection. Approximately 43,500 people took part in the tests. This vaccine provides a very high level of antibody response. The CEO of Pfizer, Albert Bourla, declared the development “a great day for science and humanity”. 

Rolling out the vaccine will be difficult. Pfizer believes that it will be able to produce approximately 50 million doses during the balance of 2020, and 1.3 billion doses during 2021. Two doses of vaccine need to be administered to make it effective. This means that only 25 million people will be able to receive the vaccine in 2020. The first group will be front-line workers and then the elderly. Another issue is that the Pfizer vaccine requires storage at very cold levels, near -37F. 

The seasonals are mixed

Historically, Pfizer experienced mixed results in December after showing robust results in November. Over the past 10 years, Pfizer has increased in value 50 per cent of the time for an average gain of 0.8 per cent. This compares to very robust results in November where Pfizer increased 80 per cent of the time for an average gain of 2.4 per cent.

Pfizer stock technical analysis

Pfizer shares broke out during the week ending 13 November. The shares closed at the highest levels since January. Prices closed above a downward sloping trend line that comes in near $38 per share. During the week the share price hit a high of $41.99 but selling pressure pushed the shares lower during the course of the week. 

Medium-term momentum has turned positive as the moving average convergence divergence (MACD) index generated a crossover buy signal. This occurs as the MACD line (the 12-week moving average minus the 26-week moving average) crosses above the MACD signal line (the nine-week moving average of the MACD line). Short-term momentum is negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 37, on the lower end of the neutral range but well above the oversold trigger level of 20.

Pfizer shares: how to trade

Pfizer shares have broken out and provide a robust purchasing area near $38. The vaccine will provide a chance for life to go back to normal if the distribution of the drug can be successful. With more than 90 per cent efficacy, front-line workers will be able to get protected in 2020. The seasonals are mixed and so are the technicals. Look for prices to consolidate near $38 and then begin to rise at the end of 2021. 

FURTHER READING: Pfizer stock price forecast: a cure for the markets?

FURTHER READING: Moderna jumps after preliminary Covid-19 vaccine trial results

Pfizer Inc
Daily change
53.03
Low: 52.95
High: 54.76
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