Prep Stock Of The Day: Pfizer

After a blockbuster June jobs report, all the world needs now is a COVID-19 vaccine. Several biotech companies are attempting to accomplish this, and Pfizer Inc. (PFE), which is working with BioNTech (BNTX), is one of the latest to show progress, making widely-followed Pfizer the PreMarket Prep Stock of the Day. 

The News And Wednesday’s Move

Before the open Wednesday, July 1, the two companies confirmed positive data from their BNT162 coronavirus vaccine study. Ahead of the surprise announcement, the issue was trading around Tuesday’s closing price of $32.70.

Within ten minutes after the announcement, the issue traded all the way to $35.08 and backed off. The issue never came close to that level during the regular session. In fact, it peaked at its opening print of the session at $34.54, and retreated to close at $33.74.

The Reason For Pfizer's Retreat

Although it is tempting to chase moves similar to this and get rich quick, there is one primary reason not to — especially in a heavily traded issue such as Pfizer. And that's the issue's recent price action ahead of the news release.

Since it peaked on April 29 at $39.22, Pfizer has faded hard in a strong market. It did not find a bottom until it put in a pair of lows at the $31.70 area last week. That represents a 19% decline in a short period of time, which is not common for the issue.

Therefore, there was plenty of overhead supply in the issue, as trapped buyers were attempting to break even or mitigate their losses. Under normal circumstances, it may take the issue a week to move that much, as it has a five day average of 34 million shares with trading range of less than $1.

Deja Vu All Over Again — And A Strong Market

Not all investors follow individual issues as closely as shorter-term investors, who make up a majority of our listening audience. As a result, more passive investors may look at price activity at the end of day and want in on the action for the following session, or even longer-term. After a weak close, buyers were lined up in the issue, and a strong rally in the broad market was adding to the upward momentum.

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