Astra Zeneca is appearing in newspapers every other day with news aboutits COVID vaccine. The latest news is the vaccine has an effectiveness of 70 percent which is not ideal in comparison to Pfizer (95 percent) and Moderna (94.5 percent), but it is not bad at all. For example, the flu vaccine usually has an effectiveness of between 20 and 60 percent, while the measles vaccine is between 95 and 98 percent effective.
Nowadays, anything that solves issues related to COVID sounds like a good business. Pharmas have attracted many investors’ attention with the good news.
What is the sector doing?
Pfizer seems to be in a sideways movement between 41 and 29 dollars. When they announced the good results of their vaccine, its price raised to 41.99, and then it quickly went back to 38.62. Therefore, it does not seem like the market is really willing to buy this stock.
Moderna is in much better shape since they are around their historical top. It has stopped there though, and the price is hesitating between continuing to rise or making the current level a resistance.
If we take the fund Legal & General Global Health & Pharmaceuticals Index Trust F Class Accumulation (ISIN GB00B6XC0829) as a reference of other pharmas, we see that it is in a sideways movement between 0.97 sterling pounds and 0.88.
What about Astra Zeneca?
When this text was written, Astra Zeneca’s price was 8006 sterling pounds. It seems that the price is accumulating since we are having lower troughs when the price makes corrections: 8,100 between June 8-12, 7,970 on September 4, and 7,765 a few days ago. It does not look good.
If the market behaves well though, it would be possible to have a rebound until 8,100 and 8,200; but in our humble opinion, it is unlikely that Astra Zeneca will visit its historical top.
Looking below, there is an important gap made in April 2020, and the stock price, should we be willing to cover it, going down to 7,120. In order to do that, the price has to surpass the support in 7,830.
Conclusion
In our opinion, the price is more likely to test the 7,830 support than go beyond 9,100 or even 9,300 the historical top. However, before that, we think it is reasonable to rebound and visit the 8,150 area.
We would not take any position here. Volatility is high, and it is difficult to open a position with a reasonable risk – potential profit balance.
What is clear is that all these vaccine announcements have not created a buying wave for Astra Zeneca.