Signal Says Buy Calls on This Cloud Stock

The shares are already flirting with all-time highs

Pharmaceutical cloud concern Veeva Systems Inc (NYSE:VEEV) scored a price-target hike to $160 from $140 at D.A. Davidson today, with the new target representing uncharted territory for the shares. What's more, VEEV recently flashed a bullish signal, suggesting now could be an opportune time for traders to buy call options on the stock.

At last check, VEEV stock was up 0.1% at $135.65, and earlier notched a fresh record high of $137.17. The security has already rallied more than 50% so far in 2019, with an early March pullback contained by its 30-day moving average.

Not only is VEEV assailing new heights, but short-term options are attractively priced. The security's Schaeffer's Volatility Index (SVI) of 27% is higher than just 7% of all other readings from the past year, suggesting near-term options are pricing in relatively low volatility expectations for the shares.

Since 2008, there have been four other times when VEEV stock was within 2% of a 52-week high while simultaneously sporting an SVI in the bottom 20% of its annual range. After those instances, the stock was higher one month later every time, averaging a healthy gain of 5.37%, per data from Schaeffer's Senior Quantitative Analyst Rocky White. A similar jump from current levels would put Veeva shares around $142.93.

Meanwhile, there's plenty of room for more bullish analyst attention to bolster VEEV even higher. The consensus 12-month price target among analysts stands at just $129.19, representing a discount to the equity's current price.

A continued short squeeze could also serve as a tailwind. Short interest dropped nearly 11% in the most recent reporting period, but still accounts for 4.3% of VEEV's total available float. At the stock's average daily trading volume, it would take about a week for shorts to buy back their bearish bets.