Pfizer Stock Forecast: PFE drops again after halting development of weight loss pill

Pfizer (PFE) stock dropped again on Tuesday after a gap down in price action to start the week. PFE gave up 3.7% of its value on Monday after the drugmaker ended the development of a promising oral pill to induce weight loss. 

The Dow Jones Industrial Average, S&P 500 and NASDAQ Composite all rose between 0.3% and 0.6% at Tuesday's open.

Pfizer stock news: Drugmaker puts all its chips on danuglipron

On Monday, Pfizer announced that it would halt the development of its once-daily diabetes and weight loss medication called lotiglipron. During early phase 1 clinical trials, Pfizer said some patients developed elevated levels of a liver enzyme called transaminases. None of the participants in the study reported negative side effects, but Pfizer decided to end its development of the drug altogether.

Instead, Pfizer will invest everything in its twice-daily danuglipron pill, which is meant to inhibit appetite and thus cause weight loss in a similar fashion. Pfizer stock likely sold off since a twice-daily pill would most likely be less attractive to patients and doctors than similar once-daily oral medications being developed by Eli Lilly (LLY) and Novo Nordisk (NOVO). The latter two pharmaceutical firms already offer weight loss injection brands called Mounjaro and Wegovy, respectively.

Morgan Stanley believes the new trend toward refashioning diabetes drugs for the purpose of weight loss could become a $54 billion market by the end of the decade. Other analysts have pushed that figure up to $100 billion since there is evidence that these drugs also inhibit cravings for alcohol and other addictive substances.

Pfizer said in its statement that it seeks to create a once-daily version of danuglipron in the future, but investors may wonder if Pfizer’s alternative will arrive too late to take market share from first movers Eli Lilly and Novo Nordisk.

Pfizer stock forecast: Hanging man candlestick a bad sign for PFE

On Monday, Pfizer stock halted near support at $36.17 before bulls pushed the stock higher. The weekly chart shows Monday’s unfinished weekly candle ( the same as the daily candle) as a hanging man candlestick. This happens when the market sends a stock down precipitously at the beginning of a session before bulls enter the price action to push the price up to a close near but below the open.

A hanging man candlestick is normally treated as a bearish signal that bulls are beginning to lose control. The best bet is that Monday’s gap down will continue. If PFE stock breaks below $36.17 again, then expect another 10% drop to the $30 to $33.36 demand zone. This supportive region held Pfizer stock up on a number of occasions between August 2019 and March 2021.

Weekly PFE chart