For his "Executive Decision" segment of Mad Money Monday night, Jim Cramer spoke again with Peter Gassner, founder and CEO of Veeva Systems Inc. (VEEV) , the cloud software provider for the life sciences industry. Shares of VEEV have rallied from below $30 in March 2016 to over $120 recently -- pretty impressive.
VEEV works with the largest pharma down to the smallest biotech firms. What the industry wants is a common set of highly functional cloud applications -- and that's what VEEV delivers. Gassner said not only is VEEV saving customer money, but it is also making the $1.7 trillion drug industry more efficient so they can continue their important work even faster.
Gassner noted that VEEV is on track for $1 billion in sales in 2019, ahead of schedule, but it still has a total market of $9 billion. It continues to add new products to grow its appeal. When asked about mergers in the industry, Gassner noted that companies are willing to pay a premium for innovation and real science, and many smaller companies have that.
Cramer said VEEV owns this market -- and he remains a buyer. Let's check out the charts and indicators to round out the discussion.
In this daily bar chart of VEEV, below, we can see how prices have rallied the past twelve months. Prices declined with the broad market in the fourth quarter, but prices saw most of the decline in October and retested that low in November and December.
VEEV tested the rising 200-day line in November and December, before rallying sharply in January and February. Prices are above the rising 50-day line, too. Trading volume looks like it has increased since August, but the new highs in February were made on lower volume, which raises a question mark.
The daily On-Balance-Volume (OBV) line has moved higher in the past twelve months, but the rise from early January barely makes a new high -- and thus is not strong confirmation of the rally so far this year. The Moving Average Convergence Divergence (MACD) oscillator has crossed to the downside in February, generating a take-profits sell signal.
In this weekly bar chart of VEEV, below, we can see the strong rise over the past three years. The bullish 40-week moving average line has helped to define the rally. The weekly OBV line shows a long sideways pattern and only recently moved to a new high.
The weekly MACD oscillator is pointed up in bullish territory, but the two moving averages that comprise this indicator have begun to narrow towards a possible take-profits sell signal.
In this first Point and Figure chart of VEEV, below, we look at daily data. The software that generates this chart is projecting a downside price target of $100.
In this second Point and Figure chart of VEEV, below, we look at weekly data. Here a bullish price target of $211 is seen.
Bottom line strategy: Two accomplished analysts look at the same chart and one is bullish and the other is bearish. Is technical analysis too subjective? I presented two Point and Figure charts -- one bearish and one bullish. What strategy makes sense? Longs should protect their profits and positions with stops below $108.