Is Pfizer stock a buy after study reveals the need for booster shots?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 5, 2021
  • Pfizer shares on Tuesday edged slightly higher after amid a report its covid vaccine wanes after six months.
  • The large US study by Lancet found the vaccine’s effectiveness decline from 88% to 47% after five months.
  • Analysts think the need for more booster shots could boost the stock price.

On Tuesday, Pfizer Inc. (NYSE:PFE) shares edged slightly higher after The Lancet published a report showing its covid-19 vaccine weakens after six months. According to the findings from a large population study, Pfizer’s and BioNTech’s covid-19 vaccine’s effectiveness reduced from 88% to 47% after five months.

The study established that the vaccine’s effectiveness against the delta variant reduced to 53% from 93% after four months, and to 67% from 97% against other variants. Overall, the vaccine has a 90% effectiveness in preventing covid hospitalisations for up to six months, and 73% against covid infection.

Pfizer looks undervalued

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From an investment perspective, Pfizer shares trade at an attractive forward P/E ratio of 12.13, making the stock a compelling option for value investors. 

However, analysts expect its earnings per share to fall by more than 33% this year before rising at an average annual rate of 12.42% over the next five years. Therefore, growth investors could opt for alternatives in the market.

Nonetheless, with the demand for more booster shots likely to rise amid the waning effectiveness of covid vaccines, the current earnings prospects may be underestimated.

Source – TradingView

Can the 100-day MA trigger a rebound?

Technically, Pfizer shares seem to be trading within a descending channel formation in the intraday chart. As a result, the stock has plunged closer to the oversold conditions of the 14-day RSI, creating an opportunity for a rebound.

Moreover, the stock appears to have found solid support at the 100-day moving average, boosting the chances of recovery. Therefore, investors could target rebound profits at about $44.12, or higher at $46.97.

On the other hand, if the stock price continues to decline, it could find support at $40.25, or lower at $38.45.

It could be time to buy PFE shares

In summary, with Pfizer shares down more than 15% since 15th August, the stock could bounce back before slipping to oversold conditions. 

In addition, the PFE stock trades at an exciting forward P/E ratio of just 12.13, thereby attracting discount hunters.

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