Pfizer Stock News and Forecast: Pharma giant takes $95 million stake in France's Valneva

• Pfizer has purchased an 8.1% stake in Valneva.
• The companies are collaborating on a Lyme disease vaccine.
• PFE stock recently broke through long-term support.

With markets closed for the Juneteenth holiday on Monday, Pfizer (PFE) announced a $95.2 million stake in French vaccine maker Valneva, according to Reuters. The investment gives Pfizer an 8.1% position as an important partner that it has been collaborating with the American pharma major on a Lyme disease vaccine. PFE shares fell 2% to $46.54 on Friday, but Valneva shares (VLA.PA) rocketed 17.9% higher to €9.36 on Monday at the time of writing.

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Pfizer Stock News: Stage 3 trials for Lyme disease vaccine await

Pfizer and Valneva have been working in partnership on the Lyme disease vaccine since April of 2020. With Pfizer's added liquidity, Valneva will now shoulder 40% of continued development costs rather than the original 30%. The two companies are planning to launch their state 3 trials for the VLA15 vaccine candidate in the third quarter of 2022.

"Pfizer's investment in Valneva highlights the quality of the work that we’ve done together over the past two years and is a strong recognition of Valneva's vaccine expertise," said Valneva CEO Thomas Lingelbach.

A vaccine for Lyme disease, which is caused by bacteria from ticks, existed in the late 1990s but was abandoned after several years due to low demand. In this present case, Pfizer will pay Valneva various levels of royalties ranging from 14% to 22%. Up to $100 million extra will be paid to Valneva based on cumulative sales and other achievements. 

Pfizer Stock Forecast: PFE breaks through long-term support

At first glance, the Pfizer daily stock chart below seems to show a reasonable consolidation structure in the price action. Since January, PFE shares have rotated between $45 and $56, and the chart is not characterized by the never-ending sell-off that has affected so many other mega-cap stocks, especially those in the tech space. At $261 billion, Pfizer is definitely a mega-cap. Bearing a 3.4% dividend, Pfizer is safer than many other stocks in this poor environment for equities as it is quite liquid and dispersed so widely among retail and institutions alike. Additionally, many shareholders use their dividends to reinvest in new shares of the company, which gives it a kind of natural floor.

Below you can see that there is a wide demand zone between $45 and $48 where the market has a tendency to buy the dip. Above here resistance is also represented by a broad supply zone between $54 and $56.

PFE daily chart YTD

Panning out for a longer-term view, however, showcases a worrying sign. The ascending support line that began in March 2021 was broken on June 13. Breaking through 15 months of support is nearly always a bad sign. If PFE stock breaks through support at $45, then support from October of 2021 lingers nearby at $41. This might be good news for long-term investors, who will continue holding it for the steady payouts, but traders will see it as evidence that PFE is not a good bet.

Though the Relative Strength Index (RSI) is oversold, the Moving Average Convergence Divergence (MACD) indicator is crossed over in the wrong direction and moving below the zero threshold. It would seem this is not the time to long Pfizer stock.

PFE daily chart over 2-year period