Pfizer Could Hit New Highs on Strong Earnings

Pfizer is moving higher after a top- and bottom-line earnings beat. Now the stock is a stone's throw away from new highs. Here's how to trade it.
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Pfizer  (PFE) - Get Report was catching a solid boost on Tuesday, up more than 4% after the company’s better-than-expected earnings report.

The company reported second-quarter earnings of 78 cents a share, beating estimates by 12 cents. Revenue of $11.8 billion sank 11% year over year but topped estimates by $250 million.

Even better, the company’s full-year guidance came in ahead of expectations.

The action has been pretty interesting in Pfizer stock. On the one hand, shares were hammered in June, cascading almost 20% in a month. However, positive news surrounding its coronavirus treatment helped give Pfizer a lift, sending it over the June highs.

Of course, momentum in other coronavirus plays has helped fuel the move too, with Moderna  (MRNA) - Get Report, Johnson & Johnson  (JNJ) - Get Report and others rallying.

It’s been a volatile ride for what is not typically a volatile stock. Let’s see where the stock can go now.

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Trading Pfizer Stock

Weekly chart of Pfizer stock.

Weekly chart of Pfizer stock.

As Pfizer looks for a potential weekly-up rotation by clearing last week’s high, notice how it’s also clearing a multi-year downtrend mark (blue line).

If the stock can build on this momentum, it could open up more upside in the name. That’s particularly true with its Covid-19 catalyst, better-than-expected guidance and 4% dividend yield.

Daily chart of Pfizer stock.

Daily chart of Pfizer stock.

The daily chart does a better job emphasizing the strength in Pfizer over the last five weeks or so.

Ahead of earnings, shares burst up to $38.50, which was resistance in April and May. Pfizer stock struggled with this level and pulled back for three straight sessions. Now powering through it, bulls are turning their attention higher.

Specifically, they are watching last week’s high at $39.42, followed by the 2020 high at $40.12. If shares can push through the latter, new highs are on the table, potentially into the $42 to $43 area.

On the downside, see that Pfizer holds the $38.50 mark. Below could send shares down into the mid-$30s. For now, the setup looks bullish, particularly if it can rotate over the weekly and 2020 highs, respectively.