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Headquartered in New York City, Pfizer is one of the largest research-based pharmaceutical companies in the world as of October 2020. The company discovers, develops and sells medicines and vaccines that help both humans and animals advance their health as well as prevent, treat and cure various types of diseases.
Pfizer was founded in 1849 by Charles Pfizer, and Charles Erhart and the company now sells its products around the world, with over 55% of its revenues generated from international markets.
The company started out as a chemicals company, producing its first product, Santonin, an anti-parasitic drug, that was an instant success. The biggest breakthrough for the company came in the 1880s with the introduction of citric acid, an important ingredient for cola drinks that were becoming increasingly popular at the time.
World War I caused a shortage of an important ingredient for the production of citric acid, but Pfizer reacted by applying fermentation technology to continue its mass production.
This technology came in handy during World War II when mass production of the antibiotic penicillin was required for the treatment of injured soldiers.
When penicillin prices fell in the 1940s, Pfizer searched for alternative drugs and the discovery of Terramycin in the 1950s marked the shift of the company from a chemicals manufacturer to a research-based pharmaceutical company.
Some of its best-performing brands include Prevnar family, IBRANCE, Lyrica, Lipitor, and the well-known Viagra.
Pfizer became a public company in 1942 and is listed on the NYSE, where it trades under the ticker symbol PFE. It falls under the Healthcare sector, under the Drug Manufacturers-General. The company has been a mainstay component of the S&P 100 and the S&P 500.
To bolster its research and drug generation efforts, Pfizer has always maintained an active portfolio throughout the years to cement its status as a major player in the healthcare industry.
Its biggest deals to date include the 2019 merger of its consumer healthcare business with GlaxoSmithKline; the 2016 $14 billion buyout of Medivation, a cancer drug company; the 2015 $15.2 billion acquisition of Hospira, the world’s largest manufacturer of generic injectable medications; and its most expensive deal as of October 2020, the acquisition of Warner-Lambert in 2000 for $90.2 billion.
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Pfizer Stock History
Since going public, Pfizer has performed five stock splits as follows: a 2-for-1 on July 1st 1983; a 2-for-1 on April 1st 1991; a 2-for-1 on July 3rd 1995; a 2-for-1 on July 1st 1997; and a 3-for-1 on July 1st 1999.
Companies traditionally turn to stock splits to ensure their stocks remain liquid and attract demand from investors, but technology has continually eliminated this desire as stocks are accessible to a wider, internet-connected investor audience even in fractional quantities. This can be a reason why traditional companies, such as Pfizer, have taken longer to perform stock splits.
Pfizer has always been an interesting stock to watch over the years. The stock moved from a split-adjusted price of circa $1 in the early 1980s and gathered momentum in the 90s, breaking above $10 by mid-1995.
It then embarked on an aggressive rally that saw the stock print its all-time high of circa $50 in April 1999. The 1990s rally was supported by positive fundamentals as the company produced hit products such as the Viagra and Lipitor brands.
The turn of the millennium was not kind to the stock. After a brief pullback, the stock posted a weak rebound that failed to breach the previous high.
Subsequently, a downtrend was triggered and combined with the effects of the 2008 global recession, Pfizer stock printed lows of below $10 in 2009.
A new gradual uptrend was then kick-started, with the stock managing to break above $20 in 2012, and it then slowly drifted higher to highs of just above $45 in 2018.
It then went on a negative spiral that printed lows of circa $25 in March 2020 as the coronavirus pandemic took its grip globally.
Pfizer has been a generous and consistent dividend payer, with a PFE stock dividend yield of around 4%. Dividend-paying stocks are usually ideal for investors that are willing to accept modest price gains but get to receive periodic income.
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How to Trade Pfizer Stock
Here are some of the factors to consider when trading the Pfizer stock:
Legislative and Taxation Issues
Pfizer operates in one of the most regulated industries, and it also sells its products all around the world. Close regulatory scrutiny and different taxation regimes in different jurisdictions can have a significant impact on the overall margins of Pfizer.
New Product Rollout
Pfizer has, over the years, experienced success with hit products such as Viagra and Lipitor. However, miss products in the medical space, where rigorous and expensive testing, verification and approval is required, can result in massive losses for the company. For instance, Pfizer announced in 2006 that it lost $1 billion after cancelling the development of Torcetrapib, a heart drug.
Negative PR and Lawsuits
Pfizer operates in a sensitive industry where it is exposed to negative PR and potential lawsuits that may provide headwinds to its stock price. The company’s brand has been maligned in numerous controversies, such as the killer children vaccine that was administered in a Nigerian village in 1996; and a bribery claim in 2020 to promote the prescription of their drugs, as well as various other cases.
In the highly profitable pharmaceutical and biotechnology industry, Pfizer faces fierce competition from big names such as Eli Lilly and Co., Novartis AG, as well as Johnson & Johnson and Bayer. The industry is characterised by massive investment in research and development, where revolutionary advancements can give a company a massive edge in the market.
Pfizer’s fiscal year runs from January to December, and the company releases quarterly and annual earnings reports to update investors on their business performance and future outlook. Positive fundamentals will usually inspire higher prices, whereas negative fundamentals can trigger selloffs.
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Pfizer Stock FAQ
- Why should I trade Pfizer shares?
As one of the largest pharmaceutical companies in the world, and one of a handful of companies developing an effective COVID-19 vaccine, Pfizer shares have had a lot of attention in 2020. While the stock has been especially volatile in 2020, you can look back and see that volatility is nothing new for Pfizer, which will often rise or fall sharply based on the results of some new drug being approved or denied. Anyone looking to participate in trading the immense pharmaceutical industry should target Pfizer as one of their picks for potential profits.
- Is Pfizer the best pharmaceutical stock for trading?
Pfizer is definitely one of the best pharmaceutical stocks for traders, especially as the COVID-19 vaccines begin to roll out. The stock is likely to see a good deal of trading volume and liquidity, as well as some large price moves, simply based on the sentiment surrounding coronavirus vaccines and their impact on reopening the global economy. While Pfizer may not always remain the best pharmaceutical company for trading, since market conditions are always changing, as we head into 2021 it does appear to be the best pharmaceutical stock for trading.
- What’s the best strategy for trading Pfizer shares?
In looking at a daily chart of Pfizer it is clear that the stock often experiences sharp spikes higher, and rapid dips lower. Those movements indicate that a technical analysis approach that uses some type of oscillator, such as the relative strength index or the MACD oscillator, can be a potentially successful strategy in trading Pfizer shares. We also know that the stock is quite sensitive to news and its own drug developments, and trading based on these fundamental prospects could be a successful strategy as well. No matter what strategy is employed, volatility in Pfizer shares should be expected, and suitable risk management strategies should be used.