Since it announced that it had developed one of the first successful COVID-19 vaccines, Pfizer (PFE) has been one of the most talked about companies in America, probably the world as well. The company’s vaccine first started getting administered back in December with the first injection going to a 90-year old woman in England. Pfizer has likely seen a big increase in name recognition around the globe, but the stock hasn’t seen a huge jump.

Pfizer is getting ready to release first quarter 2021 earnings results on May 4. Looking at the weekly chart for the stock, it could be hitting some resistance ahead of that report. We see that the $39 level has acted as resistance on a couple occasions in the past and the stock is sitting just below that level currently.

In October 2018, the stock peaked at $39.10 before retreating for a few weeks and then making a false breakout before dropping below $34. Pfizer rallied again in the second quarter of 2019 and peaked at $39.01 in early July that year. Once again the stock retreated from there, this time falling to the $30 level.

The stock did finally break through $39 in the first part of December, but the stock tumbled again and wound up back down in the $33-$34 range back in February. Now the stock has rallied over the last few months, but hasn’t been able to close a week above $39 during the recent rally.

The weekly overbought/oversold indicators are at or near overbought levels thanks to the eight week rally the stock has gone through. Now it’s heading in to the earnings report with a possible breakout or another breakdown possible.

The daily technical indicators are neutral at this time. The Tickeron Technical Analysis screener shows zero bullish signals and zero bearish signals in the last few weeks.

Having the daily indicators neutral and the weekly indicators showing overbought readings could actually help the stock breakout. I would be worried if both the daily and weekly indicators were in overbought territory.

The Fundamentals are Slightly Skewed to the Bullish Side

Looking at the Tickeron Fundamental screener, the company does get high marks in a couple of areas. The Valuation rating is extremely high at 4 and the SMR rating is well above average at 20. The rest of the readings are in the neutral range.

If we look at the numbers that go in to building the fundamental ratings, we can see why there are so many neutral readings. Earnings and revenue grew nicely in Q4 2020, but they had been shrinking in recent years. For Q4 earnings were up 17% and revenue was up 12%. Over the last three years earnings have declined by an average of 12% per year while sales have declined by 11% per year.

For Q1 analysts expect earnings to decline slightly. The current consensus EPS estimate is $0.78 and that is down from $0.80 in Q1 2020. Revenue is expected to increase by 13.4%. For 2021 as a whole revenue is expected to jump by 50.9% while earnings are expected to increase by 52.3%. The expected earnings and revenue growth are certainly more attractive than the past few years, but the stock price hasn’t really reflected the huge expectations.

Besides the expected growth, another area that is attractive for Pfizer is its profitability measurements. The company boasts a profit margin of 34.6% and a return on equity of 19.8%. Both of those figures are well above the industry averages.

Even the Sentiment Indicators are Neutral

I guess I should not have been surprised when I checked the sentiment indicators for Pfizer. With the fundamentals being somewhat neutral and the mixed readings from the daily and weekly technical indicators, I thought maybe the sentiment would point definitively in one direction or the other. But they don’t.

We have one indicator that shows extreme optimism, one that shows extreme skepticism, and one that is slightly more optimistic than average. The put/call ratio is the one that shows extreme optimism. There are 458,336 puts open and 914,048 calls open at this time. This puts the ratio at 0.50 and that is well below average and indicative of extremely bullish sentiment from option traders. The average ratio falls in the 0.90 to 1.10 range.

The indicator that shows extreme skepticism is the buy percentage from analysts. There are 22 analysts covering the stock with only six “buy” ratings. The other 16 analysts all have “hold” ratings on the stock. Looking at the number of buy ratings as a percentage of the total, Pfizer’s buy percentage is only 27.3%. The average buy percentage falls in the 65% to 75% range.

Short sellers are slightly optimistic, or at least they aren’t pessimistic enough to make too big of a bearish bet. The short interest ratio is at 2.26 and the average ratio falls in the 3.0 range. The number of shares sold short did drop from 68.3 million to 60.9 million from mid-March through mid-April and that suggests growing optimism.

Looking at the overall picture for Pfizer as it heads in to the earnings report, I have to recommend exercising caution about making a big bet in either direction. The long-term outlook for Pfizer is pretty good, but given all of the different neutral readings from the fundamental, sentiment, and technical indicators, I think the stock could break either way. A strong report could shift enough investors in to the bullish camp to push the stock through the $39 level and a big move higher could ensue. A disappointing report could shift investors enough to push the stock back down to the $33-$34 range once again.

If you are a risk taker, you could consider a straddle using the $38.50-strike options. The weekly options that expire on May 28 shows a slightly bearish bias based on the prices. The puts are currently priced at $1.21 and the calls are going for $0.91. This would give you a cost basis of $2.12 for the straddle and that means in order to make a profit the stock would need to move above $40.62 or below $36.38 before next Friday. If you go out another week, the 38.50 straddle would cost you $2.18. That isn’t a huge difference for an extra week of time.

Personally, I will sit this one out. There are too many neutral factors and I don’t want to have to rely on a 5% move in order to break even on a straddle.