When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Trade Alert - Veeva Systems Inc. (VEEV) – BUY
BUY the Veeva Systems Inc. (VEEV) September 2019 $140-$145 in-the-money vertical BULL CALL spread at $3.70 up to $4.00
Opening Trade
8-8-2019
expiration date: September 20, 2019
Portfolio weighting: 10%
Number of Contracts = 27 contracts
If you thought there was no cloud stock for healthcare, then you thought wrong.
Veeva shares have exploded 87% YTD bagging all-time high after all-time high.
Q1 numbers were nothing short of awesome with Veeva’s adjusted first-quarter fiscal 2020 EPS performance surging 51% from the year-ago period on the back of 25% revenue expansion.
Moving on, Veeva’s growth is projected to continue in the second quarter, with a projected bump of 25.6% on the back of nearly 24% revenue expansion.
Meanwhile, the cloud company’s full-year revenue is expected to climb 21.9% to reach $1.05 billion to help earnings climb by 24.5%.
Fiscal 2020 and 2021 are estimated to be homeruns too, so what’s not to like?
If you don’t know this company, let me tell you who they are.
Veeva Systems (VEEV) is a cloud-computing company focused on pharmaceutical and life sciences industry applications.
Founder and CEO of Veeva Systems Peter Gassner cut his teeth at Salesforce serving as Senior Vice President of Technology.
His job was building the salesforce.com platform including product, marketing and developer relations.
Gassner has effectively transplanted the Salesforce platform model and applied it to the life sciences industry and has done a great job doing it.
The Veeva Commercial Cloud includes a CRM platform that aids drug company’s management of clients.
The Veeva Vault is a tool that tracks industry regulations, clinical trials, and recommends actionable habits in the cloud.
Veeva's CRM platform is powered by the Salesforce1 app development platform and is integrated into the broader Salesforce Marketing and Service Clouds.
The first mover advantage has offered all the low-hanging fruit for Veeva.
The lack of competition surely never lasts but the extra time to pad their lead is only a positive to its business model.
Veeva has already lured in some of the health industries’ biggest names such as GlaxoSmithKline (GSK), AstraZeneca (AZN), Merck & Co. (MRK), and Novartis (NVS).
These heavy hitters are meaningfully tied to its ecosystem, and it is safe to say that these relationships are only scratching the surface and have the potential to expand as Veeva installs more add-on tools into its platform.
The popularity shows up in the numbers with Veeva’s 3-year sales growth rate hovering around 30%.
Even better, the profitability of Veeva is indicative of the strength in its business model. They are simply at the right place at the right time to capture the momentum from the digital crossover in the healthcare industry.
Many similar names like Dropbox (DBX) are enormous loss-making enterprises but Veeva has shrugged off this stereotype that many cloud companies of its size can’t be profitable.
I believe Veeva is a buy-on-the-dip candidate because of its favorable market position, rapidly expanding margins, and its low enterprise value which deems it, as I daresay, a lucrative buyout target for larger industry cloud players like Salesforce.
Volatility is extremely high and spreads wide – please execute limit orders only.
Here are the specific trades you need to execute this position:
Buy 27 September 2019 (VEEV) $140 calls at………….………$24.75
Sell short 27 September 2019 (VEEV) $145 calls at………….$21.05
Net Cost:……………………..…….………..…….....$3.70
Potential Profit: $5.00 - $3.70 = $1.30
(27 X 100 X $1.3) = $3,510 or 35.10%
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on “How to Execute a Vertical Bull Call Spread” by clicking here.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.
Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
