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Veeva Systems ((VEEV - Free Report) ) is a cloud software stock ripe for a breakout after chopping around the last few years as the wider tech sector and the Nasdaq soared to all-time highs.
Veeva’s various cloud software offerings serve vital segments of the economy from pharmaceutical giants to biotech upstarts. VEEV’s earnings outlook has improved significantly and its balance sheet is outstanding—$4 billion in cash and equivalents and $5.91 billion in total assets vs. $1.27 in total liabilities, with zero debt.
Veeva grew its sales from $210 million in FY14 to $2.36 billion last year, helping boost VEEV shares by 960% over the last decade to triple the Zacks Tech sector. Yet, VEEV trades roughly 40% below its peaks and 17% under its average Zacks price target.
The tech firm and the stock are proven winners. Now might be the time for investors to heed tried-and-true investment advice and buy Veeva while others are fearful.
Essential Tech for Biotechs
Veeva sells cloud-based offerings geared toward the pharmaceutical and life sciences industries. Some of the largest biopharmaceuticals in the world, including firms like Merck, Bayer, Bristol Myers Squibb, and beyond utilize an array of Veeva’s offerings.
Veeva helps clients improve and streamline their critical business functions, with software and services for research and development, regulatory processes and compliance, safety, clinical trials, marketing, and beyond.
Veeva’s technology enables its clients to bring “products to market faster and more efficiently” while maintaining compliance. Veeva closed 2023 (its fiscal 2024) with 1,432 customers, adding 44 from the prior year. Veeva’s R&D Solutions segment boasted 1,078 customers and Commercial Solutions finished last year with nearly 700 customers.
Image Source: Zacks Investment Research
Veeva is one of the only tech firms that joins together clinical operations and clinical data management. Veeva’s Clinical Platform enables its customers to connect sponsors, research sites, and patients for more effective and efficient clinical trials.
VEEV has also rolled out mobile innovations to provide information to field teams from any device. Veeva in April launched its AI partner program to provide the cutting-edge technology and support needed to integrate generative AI solutions seamlessly into various Veeva Vault applications.
Artificial intelligence is the growth area of the market and it will quickly become essential to the life sciences industry. Veeva must continue adapting to the AI future to retain clients and add customers.
Recent Growth & Outlook
Veeva grew its fiscal 2024 (last year) revenue by 10%, driven by a 10% increase in subscription services (roughly 80% of total sales). The firm’s Q4 sales popped 12% to finish the year on an upbeat note. Veeva’s adjusted full-year earnings jumped 13%, capped off by a 20% expansion in the fourth quarter.
Veeva is expected to post 16% revenue growth in its FY25 (2024) and another 14% next year to climb from $2.36 billion last year to $3.11 billion next year (adding $750 million to the top line in two years).
Image Source: Zacks Investment Research
Current estimates mark a slowdown compared to the 25% to 35% sales growth the cloud firm posted between 2016 and 2022. Thankfully, Veeva shares were already punished for cooling growth and its forecast marks a solid improvement from its 10% expansion last year.
Veeva provided upbeat guidance last quarter and its EPS outlook has jumped significantly over the past 12 months. VEEV’s FY25 (this year) consensus earnings estimate has surged 26% over the last year, with its estimate for next year 21% higher. VEEV’s improved bottom-line outlook earns it a Zacks Rank #1 (Strong Buy), and it has topped our EPS estimates for five years running.
Veeva is projected to grow its adjusted earnings by 27% this year to $6.14 a share and then boost EPS by another 12% next year.
Performance & Technical Levels
Veeva stock has soared 960% over the last 10 years to blow away the Zacks Tech sector’s 290% run and the Zacks Computer Software-Services market’s 315%. This massive stretch and outperformance came despite VEEV lagging Tech over the past five years, up 50% vs. 135%.
VEEV trades roughly 40% below its 2021 records and 17% below its average Zacks price target. The fact that Veeva trades so far below its all-time highs, while the Nasdaq and tons of big tech names sit at or near fresh records, is compelling.
Image Source: Zacks Investment Research
The best investors attempt to buy strong stocks amid weakness and sell into strength. Wall Street will eventually turn its attention to the underperformers such as Veeva as they hunt for deals on quality stocks while many tech names look a bit overheated in the near term.
Veeva has climbed 18% in the past year, including some big swings. The stock has outclimbed tech in the last six months even though it has slipped 13% since the middle of March. VEEV found support at its 200-day moving average recently after reaching oversold RSI levels.
Image Source: Zacks Investment Research
VEEV got rejected at its 200-week and near its 2022 highs earlier this year. The stock is climbing back above its long-term 50-week moving average while trading at historically beaten-down RSI levels. Veeva could finally break out of its recent trading range if its report and guidance impress Wall Street on May 30.
Valuation
Veeva’s valuation levels are likely contributing to its underperformance since investors aren’t willing to pay as much of a premium amid slowing growth and higher interest rates. Veeva is, of course, focused on boosting profits alongside the entire tech sector during the new rate regime.
VEEV trades at 47.8X forward 12-month earnings vs. Tech’s 25.8X. Yet, Veeva’s current levels represent 40% value vs. its 10-year median and 70% value compared to its highs.
Image Source: Zacks Investment Research
VEEV’s PEG ratio, which factors in its long-term earnings growth outlook, sits at 1.9, only slightly above Tech’s 1.7. This also represents an 80% discount to its highs and 50% value against its median. And let’s not forget that Veeva shares tripled the tech sector during the last 10 years.
Bottom Line
Veeva reports its first quarter results on May 30. Some investors might want to wait for its guidance and see how Wall Street reacts to the report before they buy. Others might want to take a chance on the beaten-down stock now.
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Bull of the Day: Veeva Systems (VEEV)
Veeva Systems ((VEEV - Free Report) ) is a cloud software stock ripe for a breakout after chopping around the last few years as the wider tech sector and the Nasdaq soared to all-time highs.
Veeva’s various cloud software offerings serve vital segments of the economy from pharmaceutical giants to biotech upstarts. VEEV’s earnings outlook has improved significantly and its balance sheet is outstanding—$4 billion in cash and equivalents and $5.91 billion in total assets vs. $1.27 in total liabilities, with zero debt.
Veeva grew its sales from $210 million in FY14 to $2.36 billion last year, helping boost VEEV shares by 960% over the last decade to triple the Zacks Tech sector. Yet, VEEV trades roughly 40% below its peaks and 17% under its average Zacks price target.
The tech firm and the stock are proven winners. Now might be the time for investors to heed tried-and-true investment advice and buy Veeva while others are fearful.
Essential Tech for Biotechs
Veeva sells cloud-based offerings geared toward the pharmaceutical and life sciences industries. Some of the largest biopharmaceuticals in the world, including firms like Merck, Bayer, Bristol Myers Squibb, and beyond utilize an array of Veeva’s offerings.
Veeva helps clients improve and streamline their critical business functions, with software and services for research and development, regulatory processes and compliance, safety, clinical trials, marketing, and beyond.
Veeva’s technology enables its clients to bring “products to market faster and more efficiently” while maintaining compliance. Veeva closed 2023 (its fiscal 2024) with 1,432 customers, adding 44 from the prior year. Veeva’s R&D Solutions segment boasted 1,078 customers and Commercial Solutions finished last year with nearly 700 customers.
Image Source: Zacks Investment Research
Veeva is one of the only tech firms that joins together clinical operations and clinical data management. Veeva’s Clinical Platform enables its customers to connect sponsors, research sites, and patients for more effective and efficient clinical trials.
VEEV has also rolled out mobile innovations to provide information to field teams from any device. Veeva in April launched its AI partner program to provide the cutting-edge technology and support needed to integrate generative AI solutions seamlessly into various Veeva Vault applications.
Artificial intelligence is the growth area of the market and it will quickly become essential to the life sciences industry. Veeva must continue adapting to the AI future to retain clients and add customers.
Recent Growth & Outlook
Veeva grew its fiscal 2024 (last year) revenue by 10%, driven by a 10% increase in subscription services (roughly 80% of total sales). The firm’s Q4 sales popped 12% to finish the year on an upbeat note. Veeva’s adjusted full-year earnings jumped 13%, capped off by a 20% expansion in the fourth quarter.
Veeva is expected to post 16% revenue growth in its FY25 (2024) and another 14% next year to climb from $2.36 billion last year to $3.11 billion next year (adding $750 million to the top line in two years).
Image Source: Zacks Investment Research
Current estimates mark a slowdown compared to the 25% to 35% sales growth the cloud firm posted between 2016 and 2022. Thankfully, Veeva shares were already punished for cooling growth and its forecast marks a solid improvement from its 10% expansion last year.
Veeva provided upbeat guidance last quarter and its EPS outlook has jumped significantly over the past 12 months. VEEV’s FY25 (this year) consensus earnings estimate has surged 26% over the last year, with its estimate for next year 21% higher. VEEV’s improved bottom-line outlook earns it a Zacks Rank #1 (Strong Buy), and it has topped our EPS estimates for five years running.
Veeva is projected to grow its adjusted earnings by 27% this year to $6.14 a share and then boost EPS by another 12% next year.
Performance & Technical Levels
Veeva stock has soared 960% over the last 10 years to blow away the Zacks Tech sector’s 290% run and the Zacks Computer Software-Services market’s 315%. This massive stretch and outperformance came despite VEEV lagging Tech over the past five years, up 50% vs. 135%.
VEEV trades roughly 40% below its 2021 records and 17% below its average Zacks price target. The fact that Veeva trades so far below its all-time highs, while the Nasdaq and tons of big tech names sit at or near fresh records, is compelling.
Image Source: Zacks Investment Research
The best investors attempt to buy strong stocks amid weakness and sell into strength. Wall Street will eventually turn its attention to the underperformers such as Veeva as they hunt for deals on quality stocks while many tech names look a bit overheated in the near term.
Veeva has climbed 18% in the past year, including some big swings. The stock has outclimbed tech in the last six months even though it has slipped 13% since the middle of March. VEEV found support at its 200-day moving average recently after reaching oversold RSI levels.
Image Source: Zacks Investment Research
VEEV got rejected at its 200-week and near its 2022 highs earlier this year. The stock is climbing back above its long-term 50-week moving average while trading at historically beaten-down RSI levels. Veeva could finally break out of its recent trading range if its report and guidance impress Wall Street on May 30.
Valuation
Veeva’s valuation levels are likely contributing to its underperformance since investors aren’t willing to pay as much of a premium amid slowing growth and higher interest rates. Veeva is, of course, focused on boosting profits alongside the entire tech sector during the new rate regime.
VEEV trades at 47.8X forward 12-month earnings vs. Tech’s 25.8X. Yet, Veeva’s current levels represent 40% value vs. its 10-year median and 70% value compared to its highs.
Image Source: Zacks Investment Research
VEEV’s PEG ratio, which factors in its long-term earnings growth outlook, sits at 1.9, only slightly above Tech’s 1.7. This also represents an 80% discount to its highs and 50% value against its median. And let’s not forget that Veeva shares tripled the tech sector during the last 10 years.
Bottom Line
Veeva reports its first quarter results on May 30. Some investors might want to wait for its guidance and see how Wall Street reacts to the report before they buy. Others might want to take a chance on the beaten-down stock now.