For his final "Executive Decision" segment of Mad Money Tuesday, Jim Cramer checked in Jim Foster, chairman, president and CEO of Charles River Labs (CRL) , the contract research company helping the biotech and pharma industries bring better, safer products to market faster.
Foster started off by saying that Charles River worked on 80% of all the drugs that have been approved over the past three years. They provide critical services to help companies discover, test and ultimately get their drugs to market faster than ever before.
Cell and gene therapy is a hot area, Foster noted, and now accounts for 10% of Charles River's revenues.
Biotechs are clearly the engines of growth in the pharmaceutical industry, Foster added. That's how we were able to develop COVID vaccines in record time using messenger RNA technologies.
When we looked at CRL on Feb. 12 of last year, we wrote that, "CRL has been in a strong technical trend for some time now. New highs just confirms the strength. Stay long or go long on a dip towards $173-$172 and risk a close below $165. The $226 area is our price target." We reached the $226 target in September.
Let's check the CRL charts again.
In the updated daily bar chart of CRL, below, we can see an impressive rally from the March low. Prices are trading above the rising 50-day moving average line as well as the rising 200-day moving average line. After a period of sideways movement the On-Balance-Volume (OBV) line has been firming again since December. A rising OBV line tells us that buyers of CRL are being more aggressive.
The Moving Average Convergence Divergence (MACD) oscillator is above the zero line but poised to cross to the downside for a take profits sell signal.
In this weekly bar chart of CRL, below, we can see a long base pattern in the $135 area. Prices are in an uptrend and trading above the rising 40-week moving average line.
The weekly OBV line is constructive and the MACD oscillator is bullish.
In this daily Point and Figure chart of CRL, below, we can see a potential upside price target in the $378 area.
Bottom-line strategy: Traders could go long CRL or add to longs on available weakness. Risk to $240 for now. Our price targets are $300 and then $378.