In This Article:
Veeva Systems’, an American cloud-computing company focused on pharmaceutical and life sciences industry applications, price target was raised to $323 from $253 with Overweight stock rating, according to Morgan Stanley equity analyst Stan Zlotsky, who also said with consistent growth, profitability, and defensibility, Veeva is a unique software asset.
Late last month, Veeva reported total revenue of $353.7 million in the second quarter, up from $266.9 million one year ago, an increase of 33% year-over-year. Subscription services revenue for the second quarter were $283.5 million, up from $217.3 million one year ago, an increase of 30% year-over-year.
Veeva forecasts fiscal year ending January 31, 2021 total revenues between $1,415 and $1,420 million and fiscal third-quarter Total revenues between $360 and $362 million.
“In our new model, we raise our FY21 revenue estimates to $1,419 million (vs $1,387 million prior), within management’s updated guidance range of $1,415-1,420 million. Our FY21 revenue estimates imply YoY subscription/total revenue growth of +28.9%/+28.5% compared to +26.6%/+25.6% previously and includes ~$92.5 million of inorganic revenue from Crossix and Physician’s World (unchanged). We raise our FY21 operating margin estimates to 38.3%, versus 36.5% previously and similarly lift our FY22/FY23 margin estimates to 39.5%/40.8% from 37.6%/39.0% previously,” said Stan Zlotsky, equity analyst at Morgan Stanley.
“Our FY21/FY22 OCF estimates also increase to $544.1 million /$682.1 million from $505.8 million /$642.3 million previously. On the back of our raised estimates and improving confidence in Veeva’s FCF durability, we increase our price target to $323 from $253 previously. To arrive at our new price target, we apply a 53x multiple (vs 43x prior) or 2.5x EV/FCF/G (vs 2.2x prior) to our CY25 FCF estimate of $1,504 million ($1,357 million previously) and discount back at a 7.6% WACC (unchanged),” Zlotsky added.
Morgan Stanley target price under a bull-case scenario is $435 and $214 under the worst-case scenario. Veeva Systems had its price objective raised by equities research analysts at Truist to $320 from $222.
Several other equity analysts have also updated their stock outlook. Piper Sandler lifted their price target on Veeva Systems to $310 from $220 and gave the company an “overweight” rating. Stephens boosted their target price on Veeva Systems to $325 from $290 and gave the stock an “overweight” rating.
Twenty analysts forecast the average price in 12 months at $293.79 with a high forecast of $325.00 and a low forecast of $228.00. The average price target represents a 7.20% increase from the last price of $274.07. From those 20, 15 analysts rated ‘Buy’, five analysts rated ‘Hold’ and none rated ‘Sell’, according to Tipranks.