On Wednesday, both Pfizer Inc. (NYSE:PFE) and Johnson & Johnson (NYSE:JNJ) shares edged lower to extend this week’s declines despite reporting positive developments.
On Monday, the Pfizer/BioNTech covid-19 vaccine received full approval from the US Food and Drug Administration for use on people aged 16 years and over.
Are you looking for fast-news, hot-tips and market analysis?
Sign-up for the Invezz newsletter, today.
The announcement triggered a more than 4% spike in the stock price. However, shares edged lower on Tuesday before extending losses on Wednesday for a net loss of about 2.44%.
On the other hand, Johnson & Johnson’s covid-19 vaccine booster shot returned positive results from its antibody response trials. According to the findings published on Wednesday, the JNJ’s covid-19 booster shot increased antibodies in early-stage trials. However, shares failed to respond positively, edging lower 0.66%.
Both Pfizer and JNJ shares have gained 29% and 11.33% this year. Therefore, while Pfizer is currently outperforming the S&P 500 index, the JNJ stock seems to be undervalued.
Is PFE a good buy in Q3 2021?
From a valuation perspective, Pfizer shares trade at an attractive forward P/E ratio of 13.42, making the stock attractive to value investors.
However, analysts expect earnings per share to fall by 33% this year before growing at an average annual rate of about 12.28% over the next five years. Therefore growth investors may opt for alternatives in the market.
Technically, the PFE stock price appears to have recently pulled back to break out of an ascending channel formation in the intraday chart. As a result, the stock is no longer in overbought conditions.
Therefore, investors can target rebound at approximately $49.61 or higher at $51.92, while $44.72 and $42.58 provide crucial support.
Or is JNJ the better buy?
Johnson & Johnson’s forward P/E ratio of 16.80 is less attractive compared to Pfizer’s. However, its earnings growth expectations for this year are better, with analysts expecting a decline of just 4.20%, before rising at an average annual rate of 8.89% over the next five years.
Therefore, Johnson & Johnson seems like a more attractive option for growth investors while PFE is appealing to value investors.
Technically, JNJ shares also seem to have recently pulled back to break out of an ascending channel formation, creating room for a rebound. Moreover, the stock is no longer trading in overbought conditions, creating the perfect opportunity for investors to buy.
Therefore, investors can target potential rebounds at approximately $176.94 or higher at $179.51, while $171.33 and $168.67 provide crucial supports.
Bottom line: why buy PFE shares instead of JNJ?
In summary, although analysts expect JNJ earnings per share to fall marginally compared to PFE’s, investors will be looking at the current valuation multiples that favor Pfizer.
Moreover, Johnson & Johnson’s 5-year growth projections are lower than Pfizer’s, meaning the PFE stock could be more appealing to growth investors in a year.
Therefore, although both stocks seem poised for a rebound, PFE appears to be more appealing going into September.
Where to buy right now
To invest simply and easily, users need a low-fee broker with a track record of reliability. The following brokers are highly rated, recognised worldwide, and safe to use:
- Etoro, trusted by over 13m users worldwide. Register here >
- Capital.com, simple, easy to use and regulated. Register here >
