PFE Explodes Higher on Billion-Dollar "Operation Warp Speed" Deal

The potential vaccine will be free for Americans, according to the HHS

Deputy Editor
Jul 22, 2020 at 10:51 AM
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It was announced this morning that the U.S. will pay $1.95 billion to Pfizer Inc. (NYSE:PFE) and BioNTech (BNTX) for 100 million doses of their jointly developed COVID-19 vaccine, should the treatment work safely and effectively. These vaccines, according to the Department of Health and Human Services (HHS), will be free to Americans. The deal is part of the government's "Operation Warp Speed" plan to quickly develop a treatment to combat the coronavirus. At last check, PFE is up 2.5% at $37.62. 

Pfizer has undoubtedly distanced itself from its March 23, six-year low of $27.88, though year-over-year the stock is still suffering a 12.5% deficit. However, PFE is up 15% this quarter and broke above its 200-day moving average late last week after several months staring up at the trendline.

Meanwhile, options bulls are circling PFE. The equity's 50-day call/put volume ratio of 8.23 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits in the elevated 87th percentile of its annual range. In other words, long calls are the hottest item on the menu at the moment, and are being ordered up at a quicker-than-usual rate. 

Options bulls are keeping busy today, too. Already, over 176,000 calls and 25,000 puts have exchanged hands -- five times the intraday average. Most popular by far is the weekly 07/24 38-strike call, followed by August 37 call, with new positions being opened at the latter.

Analysts are spit on Pfizer, with five calling it a "buy" or better, against another five that say "hold." Plus, the consensus 12-month price target of $40.04 is a 6.7% premium to current levels.  

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