Pfizer (PFE): Is the Recent Rally a Dead Cat Bounce or a Genuine Recovery Signal?

The recent performance of Pfizer (PFE) has sparked debate among investors: is the stock's rebound a fleeting rebound in a long-term downtrend-a "dead cat bounce"-or the start of a sustainable recovery? To answer this, we must dissect both the fundamental and technical signals, while drawing parallels to the volatile short-squeeze risks seen in companies like Recursion Pharmaceuticals (RXRX).

Fundamental Analysis: Earnings Beat vs. Revenue Headwinds

Pfizer's Q3 2025 earnings report delivered a surprise: an adjusted EPS of $0.87, surpassing estimates by 31.82%. This outperformance, coupled with a raised full-year 2025 EPS guidance of $3.00–$3.15, initially buoyed investor sentiment. However, the company's revenue of $16.7 billion fell short of expectations, reflecting a 7% operational decline year-over-year, primarily due to waning demand for its COVID-19 products. While non-COVID segments showed 4% growth-led by drugs like Nurtec and Vyndaqel-the broader picture remains mixed.

The company's 2026 guidance further complicates the outlook. Projected revenues of $59.5–$62.5 billion suggest a continued erosion of market share, as key products lose exclusivity and the post-pandemic demand for its vaccines fades. This raises a critical question: can Pfizer's non-COVID growth offset these structural challenges? The answer hinges on the success of its pipeline and pricing power in a competitive pharmaceutical landscape.

Technical Analysis: Rounding Bottom and Short Squeeze Potential

Technically, Pfizer's stock has been forming a broad rounding bottom pattern since late 2023, characterized by three symmetrical troughs around the $25–$26 range. This pattern, often interpreted as a sign of seller fatigue and re-accumulation, suggests a potential trend reversal if the price breaks above the $28.60–$29.40 zone. A successful breakout could target $31.40 and, in the medium term, $34.50.

Short interest data adds another layer. As of December 2025, PFE had 139.07 million shares shorted, representing 2.45% of the public float, with a short interest ratio of 2.5 days to cover. While this is relatively low compared to peers like Moderna and Novavax, a sharp price rise could trigger a short squeeze, amplifying upward momentum. However, the rally's sustainability will depend on whether the fundamentals justify the price action.

Historical Parallels: Recursion Pharmaceuticals and Short Squeeze Risks

Recursion Pharmaceuticals (RXRX) offers a cautionary tale. With 31.91% of its public float sold short, RXRX's short interest ratio of 6.5 days to cover dwarfs PFE's 2.5. This extreme short interest has created a high-risk environment, where a price surge could force short sellers to cover positions, driving volatility. Yet RXRX's fundamentals-such as a Q3 revenue miss of $5.2 million versus a $17 million forecast-highlight the dangers of relying on short-squeeze speculation.

Pfizer's situation differs. While its short interest is lower, the company's earnings beat and guidance raise provide a stronger foundation for a recovery. Unlike RXRX, which faces existential questions about its business model, Pfizer's core pharmaceuticals remain profitable. However, the parallels are instructive: both stocks are navigating high short interest and speculative trading, but only one (PFE) has a robust earnings performance to back its rally.

Is the Rally a Trap or a Turnaround?

The key lies in reconciling the technical and fundamental signals. Pfizer's rounding bottom pattern suggests a potential reversal, but the stock's 1.05% pre-market dip after the Q3 earnings report underscores lingering skepticism about its revenue outlook. The raised EPS guidance is a positive, but it does not address the structural decline in key revenue streams.

For the rally to be sustainable, Pfizer must demonstrate that its non-COVID growth can offset the losses from its pandemic-era products. This includes securing pricing stability for its blockbuster drugs and advancing its pipeline. If the company fails to do so, the rounding bottom could prove to be a false signal-a dead cat bounce masking deeper weaknesses.

Conclusion: A Cautious Bull Case

Pfizer's recent rally is a mix of hope and uncertainty. The technical pattern and short-squeeze potential offer a bullish catalyst, while the earnings beat and guidance raise provide a floor for the stock. However, the revenue shortfall and 2026 guidance revisions cannot be ignored. Investors should monitor two key metrics: (1) whether the price sustains above the $28.60–$29.40 breakout zone, and (2) if non-COVID revenue growth accelerates to offset the decline in other segments.

In the short term, the stock appears to be in a holding pattern, with the potential for a short-term rebound. But for the rally to be genuine, Pfizer must deliver on its fundamentals-not just its technicals. Until then, the line between recovery and trap remains perilously thin.