Many will wonder why JP Morgan downgraded Pfizer’s (PFE) stock when it has been on such a fantastic run.
In fact Pfizer just recently passed the highest stock price it has ever seen since it’s IPO in 1978.
The reason JP Morgan downgraded Pfizer as it expects share price growth of the latter to decelerate following a 22% rise so far this year.
The rating company states that although Pfizer is focused on re-accelerating growth of its top and bottom line beyond 2020, it is trading on par with its peers, suggesting that the growth factor has already been factored in the price.
Pfizer is committed to bring newer drugs in the market and is investing heavily in its pipeline, which includes treatment for oncology, metabolic disease and cardiovascular risks, rare diseases, immunology, inflammation and vaccines as well as immuno-oncology.
However, any further momentum in stock price is likely to be fueled by “additional pipeline success or positive new launch momentum”, largely expected beyond 2020. Thus, JP Morgan has assumed a wait and see policy for the company.
While I personally think that JP Morgan may have jumped the gun a little on downgrading the stock, I can imagine that one thing working against Pfizer in this case are earning-takers.
With such a great performance and anyone’s best guess where the stock market will ultimately go, many have decided to sell their shares while PFE stock is at it’s highest value to date.