Why Pfizer Is At A Technical 'Fork In The Road'
Pfizer Inc. (NYSE: PFE) shares are sitting right below key technical resistance at $30.31.
Is this a short-seller's dream set-up, or is it a stock that's gathering steam for a major breakout?
What The Bulls See...
• A healthy, Treasury-beating dividend yield of 3.50 percent
• An enterprise value of $192.25 billion that edges out the market capitalization of $191.49 billion
• A price-to-book ratio of 2.48
• A price-to-sales ratio of 3.79
• Net profit margins of more than 20 percent that spin off more than $14 billion in annual levered free cash flow
• Healthy balance sheet metrics, including a current ratio of more than 2.8 and a debt-to-equity ratio of 47.4 percent
What The Bears See...
• A relatively expensive price-to-earnings ratio near 15 times next year's consensus estimates when compared with estimated 2015 revenue and earnings growth of -1.9 percent and 1.4 percent, respectively
• A stock that's sitting below key resistance and is still overbought in the short-term
The Technical Take
Pfizer shares, technically speaking, could remain in a bearish technical posture unless it can manage to break and close above its downtrend-line resistance of $30.31.
The stock is overbought at this critical technical juncture, so a breakout may not be in the cards.
A failure and bearish reversal at resistance could mean a move back down to the August and October lows between $27 and $29. A breakout, on the other hand, would open up the door to more upside -- perhaps between $30.84 and $31.31.
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