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Here's Why You Should Retain Veeva Systems (VEEV) Stock for Now

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Veeva Systems Inc. (VEEV - Free Report) is well poised for growth in the coming quarters, backed by its strong product portfolio. A robust third-quarter fiscal 2022 performance, along with the increasing adoption of the company’s products, is expected to contribute further. Stiff competition and forex woes persist.

Over the past year, this Zacks Rank #3 (Hold) stock has gained 0.8% against 20.9% fall of the industry. The S&P 500 composite rose 28.6% in the said time frame.

The renowned provider of cloud-based software applications and data solutions for the life sciences industry has a market capitalization of $41.03 billion. The company projects 16.7% growth for the next five years and expects to maintain its strong performance. It has delivered an earnings surprise of 12.73% for the past four quarters, on average.

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Let’s delve deeper.

Strong Product Portfolio: We are optimistic about Veeva Systems’ robust product portfolio. The company, in November, showcased the Veeva CRM Engage Connect compliant messaging and content sharing capabilities at an event. The same month, the company also showcased its latest enhancements to Veeva CRM.

In October, Veeva Systems announced the TMF Bot, a new Veeva Vault eTMF feature that uses AI to streamline TMF management and accelerate trial execution.

Increasing Product Adoption: Veeva Systems has been registering a robust adoption for its products over the past few months. The company, in November, announced that the Center for Breakthrough Medicines adopted Veeva Vault Quality Suite to modernize development and manufacturing services for sponsors.

In October, Veeva Systems announced that the number of biotechs using Veeva Vault CDMS to run faster and more effective oncology trials more than doubled from the last-year level.

Strong Q3 Results: Veeva Systems’ solid third-quarter fiscal 2022 results buoy optimism. Both its segments performed impressively during the quarter. The company continues to benefit from its flagship Vault platform, which is encouraging. Veeva Commercial Cloud won seven 7-figure deals in core Veeva CRM, Veeva Crossix analytics and Veeva Link, which look impressive.

Veeva Systems added 15 SMB customers and had some significant enterprise expansions, which auger well for the company. The company witnessed strength in the international market as well, including wins for two large field forces in Asia, raising our optimism on the stock. Expansion of both margins also bodes well. A raised guidance for the fiscal year is a major positive.

Downsides

Forex Woes: Veeva Systems derives a major share of its revenues from international operations. Some of its international agreements provide for payment denominated in local currencies and the majority of its local costs are also denominated in local currencies.

As the company continues to expand its operations in countries outside the United States, an increasing proportion of its revenues and expenditures in the future may be denominated in foreign currencies. Fluctuations in the value of the U.S. dollar versus foreign currencies may impact its operating results when converted into U.S. dollars.

Stiff Competition: Veeva Systems operate in a highly competitive market. In new sales cycles within the company’s largest product categories, it competes with other cloud-based solutions from providers that make applications inclined toward the life sciences industry. The company’s Commercial Cloud and Veeva Vault application suites also compete to replace client server-based legacy solutions offered by large companies and other smaller application providers.

Estimate Trend

Veeva Systems is witnessing a positive estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 2.8% north to $3.66.

The Zacks Consensus Estimate for the company’s fourth-quarter fiscal 2022 revenues is pegged at $480.4 million, suggesting a 21.1% improvement from the year-ago quarter’s reported number.

Key Picks

Some better-ranked stocks in the broader medical space are Laboratory Corporation of America Holdings (LH - Free Report) or LabCorp, Thermo Fisher Scientific Inc. (TMO - Free Report) and AMN Healthcare Services (AMN - Free Report) .

LabCorp, carrying a Zacks Rank #2 (Buy), has an estimated long-term growth rate of 10.6%. The company’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.73%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

LabCorp has gained 42.1% compared with the industry’s 13.3% rise over the past year.

Thermo Fisher has an estimated long-term growth rate of 14%. The company’s earnings surpassed estimates in the trailing four quarters, the average surprise being 9.02%. It currently carries a Zacks Rank #2.

Thermo Fisher has gained 37.2% compared with the industry’s 7.4% rise over the past year.

AMN Healthcare has an estimated long-term growth rate of 16.2%. The company’s earnings surpassed estimates in the trailing four quarters, the average surprise being 19.51%. It currently sports a Zacks Rank #1.

AMN Healthcare has gained 56.8% against the industry’s 58.5% fall over the past year.