Veeva Systems Inc (NYSE:VEEV) shares are falling almost 5% today on the heels of yesterday’s third fiscal quarter print delivered for 2018. Yet, the cloud-based software provider for the drug industry outclassed Street-wide expectations for the third fiscal quarter and posted a guide that met expectations for fiscal 2018. What happened to send investor sentiment sinking on back of a quarterly beat?
Top analyst Richard Davis at Canaccord says this was simply “a quarter that did not beat by ‘enough,'” calling the stock “a funny creature” that is either polarizing investors with mania or leaving them “indifferent.”
Even if shares are “expensive” near-term, the analyst maintains that “long-term value build is real,” reiterating a Buy rating on VEEV stock with a $70 price target, which represents a 27% increase from where the stock is currently trading.
In a quarterly print that saw a “conservative” preliminary first cut of fiscal 2019, where the company offered just 30% operating margins next year where a small fall can be attributed to investments, the analyst sees this as standout execution on Veeva’s part and not a poor move. “Thinking longer-term, and this at least has a basis in logic, investors have taken a wait-and-see attitude toward Veeva’s move to become probably the first true multi-vertical SaaS company,” highlights Davis.
The analyst concludes looking ahead to the first half of 2018, where he anticipates more investors will join his confident table, arguing: “Therefore, it is a near certainty that Veeva’s advances into new industry segments – process manufacturing for now – will be a halting affair. While we are confident that Veeva has all the ingredients to make this evolutionary change, we acknowledge investors’ reticence to give full credit for success. Thus, bringing all of this back to the near-term, we thought the quarter was good and guide conservative, and we expect the stock to begin moving consistently higher once investors reach the same conclusion. Our best guess is that is sometime in the first half of calendar 2018.”
Richard Davis has a very good TipRanks score with a 68% success rate and a high ranking of #24 out of 4,729 analysts. Davis yields 23.0% in his yearly returns. When recommending VEEV, Davis garners 41.6% in average profits on the stock.
TipRanks analytics points to a preliminary bullish word on the Street for Veeva, with 4 of 5 analysts polled in the last 3 months rating a Buy on the stock and just 1 maintaining a Hold. With a return potential of nearly 20%, the stock’s consensus target price stands at $69.25.