The shares of the US group Pfizer (ISIN: US7170811035), one of the world’s leading manufacturers of pharmaceuticals, recovered to as much as 37 US dollars after the price slump from 39 US dollars to up to 26 US dollars in March 2020. On November 9, 2020, when the effectiveness and the imminent availability of the vaccine against the COVID-19 virus developed jointly with BioNTech was announced, Pfizer shares rose at times by 15 percent to nearly 42 US dollars. However, the share was subsequently unable to fully maintain its high level.
The investment idea: Pfizer shares performed significantly worse in the past 12 months with a plus of seven percent than the S & P500 index, which rose by 17 percent in the same period and of which it is a component. After the consistently positive company news and positive analysts’ assessments, Pfizer shares, which are classified as severely undervalued, should at least be spared a significant fall in the next few months if the market environment remains friendly. If you still want to reduce the risk of buying shares directly, you could consider investing in a discount certificate that enables positive returns not only when the share price rises, but also when the share price stagnates or falls.
How it works: If the Pfizer share is quoted at or above the cap on the valuation day of the certificate, the discount certificate will be sold with its maximum amount of USD 34, which at the current EUR / USD exchange rate of USD 1.21 is a EUR equivalent of EUR 28. 10 euros is repaid.
The key data: The HVB Discount Certificate (ISIN: DE000HR3SFQ2) on Pfizer shares is capped at USD 34. The valuation date is December 2, 2021, and the certificate will be repaid on December 24, 2021. At the Pfizer share price of USD 39.62 and the Euro / USD rate mentioned, investors could purchase the certificate for EUR 25.90. This means that the certificate is 20.90 percent cheaper than the share.
The opportunities: Since the certificate is currently available at EUR 25.90 (= USD 31.34), it will enable a gross return of 8.49 percent over the next twelve months with a roughly constant EUR / USD exchange rate, if the Share price on the valuation date not quoted at 14.18 percent compared to its current value in the minus. In contrast to bonus certificates, with discount certificates only the closing price relevant on the valuation date is of importance for the investment result. A falling euro will have a positive impact on the investment result.
The risks: If the Pfizer share is listed below the cap of USD 34 on the valuation day, the certificate will be redeemed at the closing price of the share determined on the valuation day. If the share then trades below the purchase price of the certificate, the investment will end in the red. A rise in the exchange rate of the euro against the USD will have a negative impact on the investment result.
This article does not constitute a recommendation to buy or sell Pfizer shares or investment products based on Pfizer shares. No liability is assumed for the accuracy of the data.
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