Is Pfizer a Safe Investment?

With shares of Pfizer (NYSE:PFE) trading around $31, is PFE an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework.

T = Trends for a Stock’s Movement

Pfizer is a biopharmaceutical company that discovers, develops, manufactures, and sells medicines for people and animals worldwide. The company manages its operations through five segments: Primary Care, Specialty Care and Oncology, Established Products and Emerging Markets, Animal Health and Consumer Healthcare, and Nutrition. Pfizer’s main products are human and animal biologic and small molecule medicines, as well as vaccines, nutritional products, consumer healthcare products, and products for the prevention and treatment of diseases in livestock and companion animals.

Pfizer will again be shipping a thyroid drug that was in short supply last year. The company ran into issues after it attempted to try a new manufacturing process that resulted in a recall. The drug, Levoxyl, should be available in U.S. retail pharmacies around March 3, according to the Wall Street Journal. To combat the loss in market share during the shortage, the company is also offering eligible new patients a 30-day free trial of the drug, although it’s unclear whether patients will be willing to switch back. Pfizer first started recalling the thyroid medicine in February 2013, when consumers began reporting issues of plastic-like odors.

The company investigated the complaints and tracked the odors to the medicine’s oxygen-absorbing containers in both the 100-count and 1,000-count bottles. The odor was unlikely to cause health problems, Pfizer said, but was recalled “out of an abundance of caution,” according to a FierceBiotech report. All told, the company recalled about 52,000 bottles of Levoxyl.

T = Technicals on the Stock Chart Are Strong

Pfizer stock has been trending higher in the last couple of years. The stock is currently pulling back and may need time to stabilize. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Pfizer is trading above its rising key averages, which signals neutral to bullish price action in the near-term.


Source: Thinkorswim

Taking a look at the implied volatility (red) and implied volatility skew levels of Pfizer options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

Pfizer options




What does this mean? This means that investors or traders are buying a significant amount of call and put options contracts as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

April Options



May Options



As of Monday, there is average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Mixed Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Pfizer’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Pfizer look like and more importantly, how did the markets like these numbers?

2013 Q4

2013 Q3

2013 Q2

2013 Q1

Earnings Growth (Y-O-Y)





Revenue Growth (Y-O-Y)





Earnings Reaction





Pfizer has seen mixed earnings and decreasing revenue figures over the last four quarters. From these numbers, the markets have had mixed feelings about Pfizer’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has Pfizer stock done relative to its peers – Merck (NYSE:MRK), Novartis (NYSE:NVS), and Sanofi (NYSE:SNY) — and sector?






Year-to-Date Return






Pfizer has been a relative performance leader, year-to-date.


Pfizer discovers and develops medicines for people and animals around the world. The company will again be shipping a thyroid drug that was in short supply last year. The stock has been trending higher over the last couple of years but is currently pulling back. Over the last four quarters, earnings have been mixed while revenues have been decreasing, which has produced mixed feelings among investors. Relative to its peers and sector, Pfizer has been a relative performance leader year-to-date. Look  for Pfizer to OUTPERFORM.

Using a solid investing framework such as this can help improve your stock-picking skills. Don’t waste another minute — click here and get our CHEAT SHEET stock picks now.

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