Source: PaxForex Premium Analytics Portal, Fundamental Insight

Investors have faced disappointment with Pfizer in the past year as the company's stock experienced a significant decline of 28.8%. This downward trend can be attributed, in part, to the expected decline in sales for Pfizer's COVID-19 vaccine, Comirnaty, and its antiviral treatment, Paxlovid. However, an overlooked factor is that investors have not recognized Pfizer as a promising "oasis stock."

In contrast, since the beginning of 2023, certain companies like Eli Lilly, Crispr Therapeutics, Microsoft, and Nvidia have attracted significant investor interest, leading to their shares outperforming the broader market. These companies share a common thread of being associated with cutting-edge technologies such as artificial intelligence, gene editing, or weight-loss treatments, which have captured investors' attention.

Despite Pfizer's extensive $70 billion business development spending spree in recent years, the company has struggled to impress Wall Street as of late. This sentiment is reinforced by the fact that Pfizer's stock currently trades at an astonishing forward-looking earnings yield of 9.2%. This valuation is significantly undervalued compared to other major pharmaceutical stocks, which have an average earnings yield of 7%, as well as the 10-year U.S. Treasury bond, which currently yields 3.73%.

In essence, investors have not fully embraced Pfizer's compelling value proposition, which revolves around the potential for the company to become a powerhouse in immunology, rare blood disorders, and cancer treatment by the end of the decade. However, a particular set of clinical assets may soon capture the market's attention and alter this situation: the oral glucagon-like peptide-1 receptor (GLP-1) agonists, danuglipron and lotiglipron.

Danuglipron has recently demonstrated outstanding results in a mid-stage trial, showing promise as a dual treatment for controlling blood sugar and promoting weight loss in individuals with type 2 diabetes. However, Pfizer, the pharmaceutical giant, is patiently awaiting the forthcoming mid-stage trial data for lotiglipron before deciding which candidate to advance into phase 3 testing.

Why is this significant? Shares of Eli Lilly and Novo Nordisk have experienced substantial upward trends over multiple years, largely driven by their GLP-1 drugs, tirzepatide and semaglutide, respectively. These innovative medications are expected to generate annual sales of nearly $100 billion due to the increasing prevalence of diabetes and obesity worldwide.

Pfizer is entering the GLP-1 market somewhat later, but its oral offerings have the potential to effectively compete against tirzepatide and semaglutide, both of which require injection, once all is said and done.

Following the publication of danuglipron's impressive mid-stage trial data, Cantor Fitzgerald, a financial services firm, has reiterated its price target of $75 per share for Pfizer's stock. This target represents a potential increase of approximately 94% compared to the current stock price.

In contrast, most other firms covering Pfizer have been more cautious, opting to wait for phase 3 data from one of the GLP-1 candidates before revising their fair value estimates. This conservative approach is understandable, considering that mid-stage data often do not reliably predict the results of late-stage trials. Additionally, by the time Pfizer enters the GLP-1 market, tirzepatide and semaglutide may already have established themselves as strong competitors.

What does this mean? It suggests that Pfizer possesses a pipeline asset for type 2 diabetes and weight loss that is not fully recognized by the market. It is likely that the drugmaker will have late-stage trial data on either danuglipron or lotiglipron ready for presentation by 2025, paving the way for a commercial launch in 2026.

The bottom line is that if Pfizer can develop a GLP-1 asset that surpasses the clinical performance of the current market leaders, it could potentially have one of the best-selling drugs in history. In such a scenario, Cantor Fitzgerald's ambitious price target, though premature at the moment, might not appear as far-fetched in about three years. Aggressive investors may consider taking a chance on this leading big pharma stock in the near future.

As short as the price is below 42.00, follow the recommendations below:

• Time frame: D1
• Recommendation: short position
• Entry point: 37.79
• Take Profit 1: 36.00
• Take Profit 2: 32.00

Alternative scenario:

If the level of 42.00 is broken-out, follow the recommendations below:

• Time frame: D1
• Recommendation: long position
• Entry point: 42.00
• Take Profit 1: 44.00
• Take Profit 2: 46.00