The recent progress in the stock of Pfizer Inc. (NYSE:PFE) has alerted everyone to look out for right opportunity to invest. It is widely believed that a stock’s future performance can best be predicted by analyzing prior trends and patterns in price. In the case of PFE, the chart has some interesting things to say about where the stock might be headed in the future.How has the stock performed recently?
Pfizer Inc. (NYSE:PFE) has been trading in a bullish manner, based on the relative positions of the stock’s 20 and 200 day moving averages. In the last month, the price of PFE has decreased -5.15%. Shares are now up over the past year, outperforming the broad market by -100% and underperformed a peer group of similar companies by -87%. After the latest session, which saw the stock close at a price of $34.66, PFE sits below its 52-week high.Momentum indicators
Of course, these surface-level price movements don’t tell us much about the direction that PFE may be headed in the future. Fortunately, there is way to use the speed and magnitude of these price changes to predict future performance, thanks to what are known as momentum indicators. As momentum slows, it might be a sign that a support or resistance level has been reached, and that a trend is about to reverse. Two such indicators are the RSI (Relative Strength Index) and the Stochastic %k Oscillator, which fluctuate on a scale of 0 to 100. A reading above 70 indicates that a stock is overvalued, and a reading below 30 implies that it is undervalued. The 20-day RSI for PFE is 40.94%, which suggests that the stock is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. The 20-day Stochastic %k measure, which sits at 13.12%, tells a different story, and suggests that PFE currently trades in oversold territory.What do the trading volumes reveal?
Volume patterns are useful for gauging the level of conviction behind price changes, and can be used to make predictions about future price movements. A sudden increase in a stock’s activity can be a sign that investors are trading in anticipation of a catalyst, or that investors feel very strongly in one way or the other about the future direction of a stock. Pfizer Inc. (PFE) average trading volume of 32,081,086 during the past month is 67.88% above its average volume over the past year, indicating that investors have been more active than usual in the stock in recent times.
PFE is currently undervalued by -13.89% relative to the average 1-year price target of $40.25 taken from a group of Wall Street Analysts. The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 2.60, which implies that analysts are generally neutral in their outlook for PFE over the next year.How risky is the stock?
No study on the valuation of a stock is complete without taking into account risk. When analyzing the systematic risk associated with a stock, analysts look at beta, which measures the stock’s volatility relative to the overall market.
Pfizer Inc. (NYSE:PFE) has a beta of 0.94, compared to a beta of 1 for the market, which implies that the stock’s price movements are less extreme than the market as a whole. PFE therefore has an below average level of market risk. During the past couple of weeks, PFE average daily volatility was 39.77%, which is -21.34 percentage points higher than the average volatility over the past 100 days.