Veeva Systems is a cloud solutions provider to the global life sciences industry. Think pharmaceuticals and biotech. A quick look at the Veeva’s financial statements reveals that the company has all the characteristics of a great business. Revenue is rising by over 25% a year and so are profits and free cash flow. Margins are high and debt is close to zero. The stock price reflects these strong fundamentals and is up 453% since the company’s 2013 IPO.
But the current price of $210 a share is actually 39% lower than VEEV’s all-time high. In August, 2021, Veeva Systems stock reached a record of $344 a share. Two months ago, in May, 2022, it dropped as low as $152. Obviously, strong sales growth, a fortress balance sheet and high profits still don’t mean Veeva Systems is immune to market crashes.
That is why we’ll use a different approach to determine if the stock is a good buy at $210 or not. The daily chart below allows us to put all of Veeva Systems’ history as a public company into Elliott Wave context.
Similar Elliott Wave setups occur in the Forex, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!
The spectacular uptrend from just over $17 in 2014 to $344 in 2021 can be seen as a five-wave impulse. The pattern is labeled I-II-III-IV-V, where the five sub-waves of wave III are also visible. By the way, so is the impulsive structure of wave 1 of III, marked i-though-v.
Another impulsive sequence, but in the opposite direction, can be recognized in Veeva Systems’ decline from $344 to $152. We’ve labeled it 1-2-3-4-5 in wave A. According to the theory, a three-wave correction follows every impulse. This means the bottom at $152 is unlikely to be the end of VEEV’s corrective phase.
Instead, it makes sense to expect only a temporary recovery in wave B, followed by another decline in wave C. Given the hefty valuation of Veeva Systems, we wouldn’t be surprised if wave C drags the stock towards the $100 mark. Then we might be interested.
In our Elliott Wave PRO subscriptions we provide analyses of Bitcoin, Gold, Crude Oil, EURUSD, USDCAD, USDJPY and the S&P 500 twice a week! Check them out now!
