Option Trade
Pfizer Inc. (NYSE:PFE) Calls 
Monday, 1st August, 2016

** OPTION TRADE: Buy the PFE NOV 18 2016 37.000 call at approximately $1.00. Place a pre-determined sell at $2.00.

Note: No protective stop losses added -- but if you wish to do so make it $0.40.

by Ian Harvey

August 01, 2016

Pfizer Inc. (NYSE: PFE), a leading global drug company, will be releasing its earnings data before the market opens on Tuesday, August 2nd. Analysts expect Pfizer to post earnings of $0.62 per share for the quarter, 11% higher than what it reported a year earlier, on the back of nearly a 10% increase in quarterly revenue. Pfizer has set its FY16 guidance at $2.38-2.48 EPS.

Pfizer last posted its earnings results on Tuesday, May 3rd. The biopharmaceutical company reported $0.67 EPS for the quarter, topping the Thomson Reuters’ consensus estimate of $0.55 by $0.12. The company had revenue of $13 billion for the quarter, compared to the consensus estimate of $12 billion. During the same quarter last year, the business earned $0.51 EPS. Pfizer’s quarterly revenue was up 19.3% compared to the same quarter last year. On average, analysts expect Pfizer to post $2.46 EPS for the current fiscal year and $2.65 EPS for the next fiscal year.

Pfizer was in the news recently, finally settling a decade-long case relating to the cardiovascular risks associated with its blockbuster arthritis drugs Celebrex and Bextra. Terms were not disclosed but an earlier related settlement involving Bextra cost the company $2.3 Billion.

With the lawsuit settlement behind Pfizer, and the potential for strong quarterly results, now is the time to evaluate shares and take advantage of a likely positive movement.

Analysts are forecasting that Pfizer will see its revenues grow by 7% a year over the next half-decade - a considerable improvement from the flat growth it registered in the preceding 5 years. Treatments such as Pfizer's breast cancer treatment Ibrance and (possibly) Inflectra are expected to lead this growth. It also has a number of potential blockbusters in its drug pipeline such as its lung cancer treatment Avelumab.

The stock has a market capitalization of $222.40 billion and a PE ratio of 30.06. The stock has a 50 day moving average price of $35.41 and a 200 day moving average price of $32.39. Pfizer has a 52-week low of $28.25 and a 52-week high of $37.19.

Analyst and Hedge Funds Input

Pfizer Inc. was been given a $54.00 price target by research analysts at Piper Jaffray Cos. in a research note issued last Monday. The brokerage presently has a a “buy” rating on the biopharmaceutical company’s stock. Piper Jaffray Cos.’s price objective would suggest a potential upside of 46.98% from the company’s previous close.

Also Chubb Ltd. bought a new stake in shares of Pfizer Inc. during the first quarter, according to its most recent disclosure with the Securities and Exchange Commission (SEC). The fund bought 400,000 shares of the biopharmaceutical company’s stock, valued at approximately $11,856,000. Pfizer comprises approximately 3.2% of Chubb Ltd.’s investment portfolio, making the stock its 22nd largest position.

Also, several other equities research analysts have recently commented on the company.

• JPMorgan Chase & Co. set a $40.00 target price on shares of Pfizer and gave the stock a “buy” rating in a report on Monday. BMO Capital Markets reaffirmed a “buy” rating and set a $40.00 price objective on shares of Pfizer in a research report last Thursday.

• Zacks Investment Research cut shares of Pfizer from a “buy” rating to a “hold” rating in a research report on Wednesday, July 20th.

• Vetr cut shares of Pfizer from a “buy” rating to a “hold” rating and set a $37.97 price objective for the company. in a research report on Thursday, July 14th.

• Finally, Jefferies Group set a $41.50 price objective on shares of Pfizer and gave the stock a “buy” rating in a research report on Thursday, July 14th.

Ten analysts have rated the stock with a hold rating, fourteen have issued a buy rating and one has issued a strong buy rating to the company’s stock. Pfizer has an average rating of “Buy” and a consensus target price of $38.19.

Harvey’s Options Volatility Indicator

Conclusion

Pfizer's combination of a high - and potentially rising -- dividend yield, solid balance sheet, strong prospects from its pipeline of drugs and treatments and relatively attractive forward valuation metrics make it an essential buy

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

** OPTION TRADE: Buy the PFE NOV 18 2016 37.000 call at approximately $1.00. Place a pre-determined sell at $2.00.

Note: No protective stop losses added -- but if you wish to do so make it $0.40.

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.



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