PreMarket Prep Stock Of The Day: Pfizer

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

After a blockbuster June jobs report, all the world needs now is a COVID-19 vaccine. 
Several biotech companies are attempting to accomplish this, and Pfizer Inc. PFE, which is working with BioNTech (NASDAQ BNTX), is one of the latest to show progress, making widely followed Pfizer the PreMarket Prep Stock of the Day. 

The News And Wednesday’s Move: Before the open Wednesday, the two companies confirmed positive data from their BNT162 coronavirus vaccine study. Ahead of the surprise announcement, the issue was trading around Tuesday’s closing price of $32.70.

Within 10 minutes after the announcement, the issue traded all the way to $35.08 and backed off. The issue never came close to that level during the regular session. In fact, it peaked at its opening print of the session at $34.54 and retreated to close at $33.74.

The Reason For Pfizer's Retreat: Although it is tempting to chase moves similar to this and get rich quick, there is one primary reason not to — especially in a heavily traded issue such as Pfizer. And that's the issue's recent price action ahead of the news release.

Since it peaked on April 29 at $39.22, Pfizer has faded hard in a strong market. It did not find a bottom until it put in a pair of lows at the $31.70 area last week. That represents a 19% decline in a short period of time, which is not common for the issue.

Therefore, there was plenty of overhead supply in the issue as trapped buyers were attempting to breakeven or mitigate their losses. Under normal circumstances, it may take the issue a week to move that much, as it has a five day average of 34 million shares with trading range of less than $1.

Deja Vu All Over Again — And A Strong Market: Not all investors follow individual issues as closely as shorter-term investors, who make up a majority of our listening audience.

As a result, more passive investors may look at price activity at the end of day and want in on the action for the following session or even longer-term.

After a weak close, buyers were lined up in the issue, and a strong rally in the broad market was adding to the upward momentum.

Interestingly, the same sellers who were unloading shares at the $35 area on Wednesday were doing the same in Thursday’s session.

The issue peaked at $35.10 just ahead of the opening of the regular session. Once again, the issue opened well below that level, reaching an intraday high of $34.80. 

Pfizer closed Thursday's session up 2.28% at $34.51. 

Pfizer Moving Forward: From a longer-term perspective, Pfiizer has grossly underperformed the S&P 500 since 2019. 

It peaked in December 2018 at $46.47, and that level is well shy of its July 2001 high of $49.25.  

If you are attempting to add a high-yield dividend stock to your portfolio with a chance of some capital appreciation, Pfizer pays 4.4%. 

For those wanting a higher yield, a retreat back to the $32 area would enhance the payout.

The full PreMarket Prep discussion on Pfizer can be found below: 

Photo by Norbert Nagle, Mörfelden-Walldorf, Germany via Wikimedia.