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Veeva (VEEV) Rises on Robust Earnings: More Room to Grow?
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Shares of Veeva Systems Inc. (VEEV - Free Report) , a cloud-based software applications and data solutions provider for the life sciences industry, rose 8.4% on Thursday after the company announced encouraging second-quarter results as well as strong earnings outlook for the second half of fiscal 2024.
The company’s progress with major partnership opportunities with top 20 pharma companies during the second quarter reflects broad-based adoption across Veeva Development Cloud. These opportunities can lead to significant growth going forward, boosting investors’ confidence.
Veeva Systems’ shares rose 29.3% year to date against the industry’s decline of 47.4%. The S&P 500 Index has gained 18.6 in the same time frame.
Image Source: Zacks Investment Research
Solid Q2 Results
Veeva’s reported revenues of $590.2 million for the quarter outpaced market expectation by 1.4%. Continued strength in Research and Development (R&D) Solutions services and Veeva Business Consulting as well as higher Subscription services revenues led to 10.5% year-over-year growth in revenues.
Bookings performance and subscription revenue growth were led by broad-based demand across R&D Solutions. In Commercial Solutions, subscription revenue growth was driven primarily by Vault Commercial and Veeva Link.
Adjusted earnings of $1.21 per share during the second quarter was up 17.5% from the year-ago quarter’s level. The metric beat market expectations by 8%.
Although gross and operating margins contracted during the reported quarter, the company’s robust anticipated revenue growth during the second half of fiscal 2023 is likely to drive earnings as well.
Veeva Systems now expects revenues for fiscal 2024 between $2,365 million and $2,370 million. Adjusted EPS for the year is now expected to be $4.68, which is higher than the Zacks Consensus Estimate of $4.57.
Uptrend Likely to Continue
A strong outlook for fiscal 2024 & beyond looks promising, which is likely to drive Veeva’s share price to continue its uptrend.
Veeva estimates its operating income to reach $820 million during fiscal 2024, implying 35% year-over-year growth. Moreover, the company expects the metric to reach $1 billion in the next fiscal year on the back of $2.8 billion revenues. While operating income for fiscal 2025 implies nearly 21% growth, revenues are likely to be up more than 18%.
VEEV is also focused on launching new products that will create new and meaningful opportunities. Its recently launched Vault CRM is off to a strong start with its first deal with an oncology biotech. The company’s another exciting new product, Compass Patient suite, is also showing signs of higher demand. The planned addition of Compass Prescriber and National to the Compass Patient suite in January next year will bring new functionalities that may drive the demand further.
On its second-quarter earnings call, the company stated that the number of orders with its customers are rising for multi-year duration. A multi-year order is likely to provide sustainable and stable revenue growth going forward.
Veeva currently carries a Zacks Rank #2 (Buy). It also has Growth score of ‘A’ and a combined VGM score of ‘B’. The company carrying a Zacks Rank of 1 (Strong Buy) or 2 with a Value score of ‘A’ has given a return of 22.2% annually in the past 10 years.
Some other top-ranked stocks in the broader medical space are Align Technology (ALGN - Free Report) , HealthEquity, Inc. (HQY - Free Report) and McKesson Corporation (MCK - Free Report) .
ALGN’s earnings surpassed estimates in two of the trailing four quarters and missed twice, delivering an average negative surprise of 1.76%. The company’s shares have risen 75.5% year to date compared with the industry’s 13.3% growth.
HealthEquity, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 22%. HQY’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 9.1%.
The company’s shares have rallied 9.6% year to date against the industry’s 7.7% decline.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 8.1%.
The stock has rallied 9.9% year to date compared with the industry’s 13.3% growth.
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Veeva (VEEV) Rises on Robust Earnings: More Room to Grow?
Shares of Veeva Systems Inc. (VEEV - Free Report) , a cloud-based software applications and data solutions provider for the life sciences industry, rose 8.4% on Thursday after the company announced encouraging second-quarter results as well as strong earnings outlook for the second half of fiscal 2024.
The company’s progress with major partnership opportunities with top 20 pharma companies during the second quarter reflects broad-based adoption across Veeva Development Cloud. These opportunities can lead to significant growth going forward, boosting investors’ confidence.
Veeva Systems’ shares rose 29.3% year to date against the industry’s decline of 47.4%. The S&P 500 Index has gained 18.6 in the same time frame.
Image Source: Zacks Investment Research
Solid Q2 Results
Veeva’s reported revenues of $590.2 million for the quarter outpaced market expectation by 1.4%. Continued strength in Research and Development (R&D) Solutions services and Veeva Business Consulting as well as higher Subscription services revenues led to 10.5% year-over-year growth in revenues.
Bookings performance and subscription revenue growth were led by broad-based demand across R&D Solutions. In Commercial Solutions, subscription revenue growth was driven primarily by Vault Commercial and Veeva Link.
Adjusted earnings of $1.21 per share during the second quarter was up 17.5% from the year-ago quarter’s level. The metric beat market expectations by 8%.
Although gross and operating margins contracted during the reported quarter, the company’s robust anticipated revenue growth during the second half of fiscal 2023 is likely to drive earnings as well.
Veeva Systems now expects revenues for fiscal 2024 between $2,365 million and $2,370 million. Adjusted EPS for the year is now expected to be $4.68, which is higher than the Zacks Consensus Estimate of $4.57.
Uptrend Likely to Continue
A strong outlook for fiscal 2024 & beyond looks promising, which is likely to drive Veeva’s share price to continue its uptrend.
Veeva estimates its operating income to reach $820 million during fiscal 2024, implying 35% year-over-year growth. Moreover, the company expects the metric to reach $1 billion in the next fiscal year on the back of $2.8 billion revenues. While operating income for fiscal 2025 implies nearly 21% growth, revenues are likely to be up more than 18%.
VEEV is also focused on launching new products that will create new and meaningful opportunities. Its recently launched Vault CRM is off to a strong start with its first deal with an oncology biotech. The company’s another exciting new product, Compass Patient suite, is also showing signs of higher demand. The planned addition of Compass Prescriber and National to the Compass Patient suite in January next year will bring new functionalities that may drive the demand further.
On its second-quarter earnings call, the company stated that the number of orders with its customers are rising for multi-year duration. A multi-year order is likely to provide sustainable and stable revenue growth going forward.
Veeva currently carries a Zacks Rank #2 (Buy). It also has Growth score of ‘A’ and a combined VGM score of ‘B’. The company carrying a Zacks Rank of 1 (Strong Buy) or 2 with a Value score of ‘A’ has given a return of 22.2% annually in the past 10 years.
Veeva Systems Inc. Price
Veeva Systems Inc. price | Veeva Systems Inc. Quote
Other Stocks to Consider
Some other top-ranked stocks in the broader medical space are Align Technology (ALGN - Free Report) , HealthEquity, Inc. (HQY - Free Report) and McKesson Corporation (MCK - Free Report) .
Align Technology, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 17.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
ALGN’s earnings surpassed estimates in two of the trailing four quarters and missed twice, delivering an average negative surprise of 1.76%. The company’s shares have risen 75.5% year to date compared with the industry’s 13.3% growth.
HealthEquity, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 22%. HQY’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 9.1%.
The company’s shares have rallied 9.6% year to date against the industry’s 7.7% decline.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 8.1%.
The stock has rallied 9.9% year to date compared with the industry’s 13.3% growth.