Why Pfizer Stock Is Anything But a Safe Bet for Investors

PFE's fundamentals provide little security in the short- and long-term

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Pfizer Inc. (NYSE:PFE) is on the spotlight, after announcing the European Commission granted marketing authorization for VYDURA, the first medicine approved for both acute and prophylactic treatment of migraines in the European Union (EU). Plus, the Food and Drug Administration (FDA) today lifted its hold on a late-stage study of its experimental gene therapy, with the company noting it would open the first U.S. trial sites tomorrow. 

In other news, the pharmaceutical concern will report first-quarter earnings before the open on Tuesday, May 3. The security has a mixed history of post-earnings reactions, finishing four of eight next-day sessions higher over the last two years, while four were lower, including a 4.1% rise in November. This time around, options traders are pricing in a 5.4% swing for PFE, which is higher than the 2.4% move it averaged following its past eight reports, regardless of direction.  

Last seen up 1.5% to trade at $50.50 at last check, the equity is bouncing off the $47 region, after its rally to the $56 level earlier this month fell short. The 60-day moving average is still capping shares, but year-over-year Pfizer stock boasts a 30.2% lead.

PFE 60 Day

Short-term options traders are particularly bearish towards the security. This is per PFE's Schaeffer's put/call volume ratio (SOIR), which sits higher than 98% of readings from the past year. In other words, short-term options traders have rarely been this put-biased. In addition, the stock has exceeded option traders' volatility expectations in the past year, per its Schaeffer's Volatility Scorecard (SVS) of 98 out of 100.

Pfizer offers an attractive dividend yield of 3.27%, with a forward dividend of $1.60, while trading at a low forward price-earnings ratio of 6.96. Still, its fundamentals provide very little security for short- and long-term investors. Though Pfizer is expected to increase revenues by 33.1% and earnings by 62% in 2022, this growth may only be temporary. By 2023, PFE is estimated to see a 23.3% drop in revenues, and a 22.1% decline in earnings.

Additionally, Pfizer has seen inconsistent top- and bottom-line growth in recent years, only making significant progress in 2021. In fact, the company posted a 22% decline in revenue between 2018 and 2020, as well as a 41% drop in net income for 2020, making PFE anything but a safe bet.

 

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