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Is Veeva Systems a buy?

It’s time to breakdown another cloud software name! Here is the breakdown on $VEEV, otherwise known as Veeva Systems.

Current Price: $280.78

52/Wk High: $313.99

52/Wk Low: $118.11

Market Cap: $42.5 Billion

Read below for the breakdown!

Veeva Systems ($VEEV) is a major player in the healthcare equipment industry that provides cloud-based software solutions to the life sciences industry.

According to Veeva Systems, 81% of new drugs are launched with Veeva’s CRM products and supplement history is assembled 99% faster through the use of Veeva systems.

Throughout the COVID-19 stock market rally, Veeva Systems ($VEEV) has gone on a massive run, rallying 88.90% in just the past one year.

Digging into the numbers Veeva Systems delivered a beat for the 12th time in a row, reporting a Q3 2021 EPS of $0.72, which was much better than the EPS analysts consensus estimate of $0.64. On a year over year basis EPS improved 30%.

Veeva went on to report Q3 revenues of $377.5 million, representing 34% growth year over year, and subscription services revenues totaled $302.9 million, representing 34% growth as well.

Management also reported a solid operating income of $101.3 million representing a 25% increase over the 2020 same time level of $80.8 million. On a non-GAAP basis, operating income totaled $155.5 million for Q3, representing a 39% increase year over year.

As for net income, Veeva Systems reported a Q3 net income of $97.0 million, representing an 18% increase over the same time 2020 level of $82.2 million. On a non-GAAP basis, net income totaled $125.6 million, representing a 32% increase year over year.

When it comes to gross margin, Veeva Systems reported a total non-GAAP gross margin of 75.3%, all the while reporting a subscription gross margin of 85.7% and services gross margin of 33.7% on a non-GAAP basis.

Veeva Systems management reported Q4 guidance as well. Leadership expects revenues to land within a range of $378 million to $380 million.

The company expects non-GAAP operating income to land within $136 million to $138 million and net income per share to be $0.67 to $0.68 on a non-GAAP basis.

Taking a look at FY 2021 Veeva expects to end the year with revenues landing within the range of $1.446 billion to $1.448 billion.

Rounding out FY 2021, management expects non-GAAP operating income to be $566 million to $568 million and for non-GAAP net income per share to land between $2.83 to $2.84.

Not only did Veeva management report both Q4 and 2021 expectations but 2022 as well. Management is currently expecting FY 2022 revenues to land within a range of $1.700 billion to $1.720 billion along with a subscription services revenues range between $1.390 billion to $1.400 billion.

Shifting into the balance sheet, the numbers are strong.

Total Debt: $1 Million

Total Liabilities: $477 Million

Total Assets: $2.584 Billion

Cash & Short Term Inv: $1.590 Billion

While the numbers are strong, on a valuation basis Veeva Systems is quite expensive.

Price to Earnings: 127.93x

Price to Sales: 31.08x

Price to Book: 20.34x

Price to Cash Flow: 102.33x

Management has also done a solid job and performed well.

Return on Equity: 18.73%

Return on Assets: 15.31%

Return on Invested Capital: 18.26%

Given the numbers, the analysts are bullish, with a mean price target of $317.00/share, representing a 12.80% gain.

It is also important to note that the high price target is $340.00/share, representing a 20.98% upside, while the low price target is $285.00/share, representing a 1.41% upside.

The big money is quite involved as well with 86.94% of Veeva Systems being owned by institutions. Top holders include Morgan Stanley Investment Management, The Vanguard Group, and T. Rowe Price Associates.

On a technical basis, Veeva Systems could be presenting an opportunity. According to the six-month charts the MACD just crossed into positive territory with minimal upward momentum within a range of 1.41 and 2.28.

The six-month charts are also indicating an RSI of 53.14 and CCI of 43.66, both of which are relatively neutral.

In short, Veeva Systems is a strong long term pick with a solid balance sheet, consistent growth, and a growing cloud market.


Disclaimer: This is not direct financial advice, simply an opinion based on independent research.

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