Pfizer dropped as much as 20% in early trading after they announced that they would be cancelling the development and testing on one of their key new drugs.
Also, several of their bigger profit drugs will be going off patent over the next few years causing profit from those drugs to drop significantly.
The 52 week low for (PFE) Pfizer is $20.27 and it's currently trading at $24.51. Is it too early to buy in? Or should we wait for the inevitable drop when their big names go off patent?
Here's the strategy I would take. Buy in now and over the next few days as the stock drops further and then rebounds. Stop buying at about $25-$26. Give it a few months or more and the stock should have rebounded up to closer to the 52 week high of $28.60. It was at $27.86 at close yesterday. If you get in now, that's a nearly $3 a share profit in 12 months or less. 12%.
Where to sell? Well, in this particular case, I would be tempted to cut profit and run. Set a price goal at about $27.50 and sell when you get there.
You could also hold it for a year or so until about 6 months before the majority of the drugs go off patent and then sell, but I truly think the best method in this case would be a solid profit goal and then sell.
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