Following the abandonment of cholesterol-lowering drug’s development and report of fiscal 2016 third-quarter earnings that missed the analysts’ estimates by a penny, the stock of the world’s third-largest pharmaceutical company Pfizer Inc (NYSE: PFE) fell sharply to a low of $29.83. However, the stock market rally triggered by the victory of Donald Trump in the US Presidential election propelled the share price of Pfizer to a high of $33.83. The stock was unable to hold on to the gains as the investors used it as an opportunity to exit the stock. Yesterday, the stock closed at $31.54. For the reasons mentioned underneath, we anticipate the stock to decline further in the next few days.
The New York-based drug manufacturer reported an 8% increase in the third-quarter revenues to $13.05 billion, from $12.09 billion in the similar quarter of fiscal 2015. The Q3 2016 GAAP income was $1.32 billion or $0.21 per share, down 38% from $2.130 billion or $0.34 per share in Q3 2015. Excluding charges, the quarterly non-GAAP net income was $3.726 billion or $0.61 per share, compared with $3.728 billion or $0.60 per share in the corresponding quarter of 2015. The Wall Street analysts anticipated earnings of $0.62 per share on revenues of $13.05 billion for the reported quarter.
During the quarter ended September 2016, the company’s breast cancer treatment drug Ibrance generated revenue of $550 million. However, it was below the Street’s expectation of $576 million. Similarly, the pain drug Lyrica reported sales of $1.05 billion – below the analyst’s forecast of $1.28 billion. Bucking the trend, Prevnar vaccine posted sales of $1.54 billion, which was higher than the market’s expectation of $1.48 billion.
Pfizer stated that it will discontinue the development of its cholesterol-lowering drug, Bococizumab. Pfizer also acknowledged that the decision is expected to have a negative impact of $0.04 per share on the company’s FY16 earnings.
The company trimmed the upper end of the fiscal 2016 earnings guidance to $2.43 per share from the prior view of $2.48 per share. The lower end of the earnings outlook was left unchanged at $2.38 per share.
Pfizer, however, upwardly revised the lower end of the full year 2016 revenue guidance to $52 billion, from $51 billion. The company retained the upper end of the revenue guidance of $53 billion. Considering the lackluster performance, the stock is expected to remain on a dull note during the current quarter.
The 5-day chart indicates resistance for the stock at 31.70. The immediate minor support exists at 31.20. With a reading of over 80, the stochastic oscillator indicates an overbought scenario.
So, a binary trader can invest in a put (low or below option is an equivalent term used by most of the binary brokers) option to gain from the probable downfall in the price. The trader should enter only if the market price is greater than or equal to 31.50. As we are forecasting based on an extremely short-term price chart, the trader should look for a one week expiry period.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
