Here's the Price Level Where I Would Buy Doximity Stock
In his “Know Your IPO” segment of Mad Money Wednesday night, Jim Cramer reminded viewers that every market is bound by the laws of supply and demand. Right now, supply is far outstripping demand, with 19 deals coming this week alone. And while Cramer deemed the vast majority of these IPOs “absolute garbage,” there is one that stands out, Doximity (DOCS) , the health information platform for doctors.
Doximity is a social network for doctors and doctor’s offices that makes its money from advertising. The company has been around for 11 years and unlike most IPOs, is profitable.
The shares came public back in June at $41 and rose into the mid-$60s before pulling back into the $40s.
Doximity trades at 35 times sales, which is pricey, but Cramer said with 34% revenue growth, this is one cloud platform worth watching. He said he’d be a buyer on any market-induced weakness going forward.
Let’s check out two charts of DOCS and see what they say.
In the daily Japanese candlestick chart of DOCS, below, we can see all the trading in DOCS. The shares made a strong rally in June but a large upper shadow above $60 in late June tells us that traders rejected those prices. A lower shadow below $46 in early July tells us that these lower prices were rejected.
The On-Balance-Volume (OBV) line shows improvement from the middle of July.
In this daily Point and Figure chart of DOCS, below, we can see that the software is projecting the $77 area as a potential price target.
Bottom-line strategy: Traders should be patient buyers of DOCS. If there is a pullback to the $50 area traders could go long risking to $45. The $77 area is our Point and Figure target for now.