Pfizer Inc (NYSE:PFE) has been one of the worst-performing large-cap stocks over the last two years. The decline in the stock has been particularly painful for long-term holders as the stock has kept breaking down to new lows month after month.
Most of the carnage the stock has suffered can be attributed to Pfizer’s financial performance. Revenue for the company has declined from over $100 billion in FY2022 to $58.5 billion in FY 2023. During the same period, Pfizer’s operating income declined from $39 billion to $5.26 billion and net income to $2.12 billion from $31.36 billion.
While the stock has continued to slide, a few firms on Wall Street see a glimmer of hope. Among them is Cantor Fitzgerald, which on April 1, reiterated its ‘Overweight’ rating on the stock while maintaining its price target at $45, suggesting a potential upside of over 70% from its current price. Can the stock make such a dramatic move or at least stop falling? Let’s check what the charts have to say.
Signs of stabilityThe long-term weekly chart of Pfizer paints a very interesting picture. While the stock continues to remain weak as it trades below its long-term bearish trendline, earlier this year it broke above its short-term bearish trendline and made a high above $30.
Similarly, weakness can be seen in the stock as the 50-week moving average continues to trade below the 100-week moving average. However, the MACD, which is another trend indicator recently turned positive.
While most technical indicators, which are lagging indicators, continue to show weakness due to the stock’s significant downward move, there are small positive price movements since January this year that suggest a more measured decline, if any. These subtle signs of strength suggest that Pfizer’s stock is in no rush to decline rapidly in the medium to long term. Now, let’s look at what the short-term charts say.
Trading within the rangeOne look at Pfizer’s short-term 4-hour chart and it becomes clear that the stock is trading in a range since mid-December. This range can largely be defined as between $25.50 and $29.
To trade this range traders can take the help of RSI. Currently, Pfizer is trading close to the lower end of this range hence short-term traders can take a long position here with a stop loss a few cents below $26.6. If the stock moves up from here, the first hurdle it will face will be near $29, hence, they can take profits near $28.7. They can also look at oversold and overbought levels in RSI to scale in and scale out of the position.
As long as Pfizer continues trading within the range, further downside is limited. Short-term bears should wait for the stock to reach near $28.8 before initiating a fresh short position. Long-term bears should only short the stock if it breaks below $25.5 convincingly, i.e., closes below it in the daily charts.
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