Chart Of The Day: Uncertain Outlook For Pfizer Could See Stock Slide To $30

2022.11.07 11:23

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Pfizer (NYSE:) faces a $16 to $18 billion loss in revenue from 2025 through 2030 as it loses essential patents on five drugs.

The drugs account for 40% of the company’s Q3 revenue when its COVID vaccine and antiviral treatment, Paxlovid are excluded. The five drugs are -Eliquis to prevent blood clots, Vyndaqel for cardiomyopathy, Xeljanz for rheumatoid arthritis, Ibrance for breast cancer and Xtandi for prostate cancer.

It is also worth noting that the future of the coronavirus is unclear. If it subsides, it will hit demand for Paxlovid and COVID vaccines which accounted for 52% of revenue for the quarter.

CEO Albert Bourla plans to deal with these future losses by generating revenue from its recent acquisitions, leveraging its in-house drugs and vaccine pipeline as well as focusing on respiratory syncytial virus, migraines, and ulcerative colitis.

However, based on the current chart it seems investors are not convinced about the strategy.

The stock has completed a cross between a descending and a symmetrical triangle. Although the descending variety is a more transparent presentation of supply overtaking demand, once there is a breakout, technicians expect the same technical chain reaction to follow both.

Note the rising volume accompanying the downside breakout and the dead drop in that participation when the price rebounds.

I would have preferred a sharper spike as the pattern completed, but bears may feel that the sparse volume of the return move compensates, showing an obvious negative divergence.

Still, the price found resistance by the bottom of the triangle which confirms the overselling within the pattern, and the 200-day moving average is a rational bullish stronghold.

Target

Measure the pattern’s height and deduct that figure from the breakout point. The assumption is that the same interest that dominated the price structure will maintain its struggle below it, therefore repeating the $16.31 move from $46.82 to $30.51.

Trading Strategies

Conservative traders should wait for confirmation that resistance persists, such as with a long red candle, before risking a short.

Moderate traders would be content with a weekly close below the pattern.

Aggressive traders could short at will, according to their strategy, incorporating their timing, budget, and temperament. Here is a generic example:

Trade Sample – Aggressive Short Position

• Entry: $47
• Stop-Loss: $50
• Risk: $3
• Target: $38
• Reward: $9
• Risk-Reward Ratio: 1:3

Disclaimer: At the time of publication, the author had no positions in the securities mentioned.

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