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Pfizer's Path To Profit: A Look At PFE Stock As Drugmaker Rolls Out $1.5B In Cost Reductions

Published 23/05/2024, 18:36
Pfizer's Path To Profit: A Look At PFE Stock As Drugmaker Rolls Out $1.5B In Cost Reductions

Benzinga - by Surbhi Jain, .

Pfizer Inc. (NYSE:PFE) has recently launched a multi-year cost reduction initiative aimed at saving approximately $1.5 billion by the end of 2027.

This new program builds upon a $4 billion cost reduction plan announced last year.

The move came as the pharmaceutical giant faces declining investor interest and diminishing sales from its COVID-19 vaccine and treatments.

Also Read: Experts Predict Rise In COVID-19 Cases: Vaccine Stocks Climb

What Happened? Pfizer's shares rose 2.6% to $29.30 following the announcement on Wednesday, but remain down about 24% over the past year and nearly half of their peak value from December 2021. As of Thursday trading, the stock was down -2.72% by 11:50 a.m. ET.

The program will incur one-time charges of $1.7 billion, mainly for severance and implementation costs, with most charges expected this year. Actual cash outlays are anticipated in 2025 and 2026.

The initiative aims to enhance operational efficiencies, restructure its network, and improve its product portfolio. No job cuts have been announced yet, but further details will be shared in future earnings calls and investor events.

Earlier this month, Pfizer raised its annual earnings forecast and reported a better-than-expected first-quarter profit, partly due to cost reductions. CFO David Denton highlighted the strong cost control across their manufacturing platform.

Why It Matters Pfizer's cost-cutting measures are crucial as the company grapples with reduced revenue from its COVID-19 treatments. The financial headwinds have put additional pressure on Pfizer to find new revenue streams and cut costs effectively.

The company surprised analysts with a profit earlier this year, largely driven by its efforts to revolutionize cancer treatment. Pfizer’s focus on innovative cancer therapies could be its best chance to regain investor confidence.

PFE Stock Showing Strong Bullish Momentum Currently, Pfizer’s stock exhibits strong bullish momentum. Its share price is trading above its 5-, 20-, and 50-day exponential moving averages. This indicates buying pressure and positive future movement.

Chart: Benzinga Pro

The share price is $28.87, while the 8-day simple moving average (SMA) stands at $28.79, the 20-day SMA at $27.90, and the 50-day SMA at $27.26, all suggesting a bullish outlook.

However, the 200-day SMA is $29.71, which presents a more cautious signal.

Chart: Benzinga Pro

The Moving Average Convergence Divergence (MACD) indicator at 0.61 also supports a bullish sentiment. The Relative Strength Index (RSI) of 61.08 indicates that the stock is heading towards the overbought zone at and beyond 70. The Bollinger Bands have the stock trading in the upper (bullish) band, suggesting a bullish trend.

Pfizer's recent cost reduction efforts and technical indicators suggest a strong bullish outlook for Pfizer stock in the near term. The ongoing strategic initiatives and expected savings could drive continued positive performance.

Investors should monitor upcoming earnings calls for further details on the cost-cutting measures and potential job cuts, which could impact the stock’s trajectory.

Read Next: Pfizer Wins $107.5M Verdict Against AstraZeneca Over Cancer Drug Patent Dispute

Photo: Shutterstock

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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