Stock of the Week: Veeva – Strong Momentum and a Bright Future
Veeva's market position strenghtens amid industry tailwinds
Here is the 19th edition of “Stock of the Week”. You can find all the previous analyses and my articles on my main page (for an easier search, use a computer, mobile version is harder to navigate).
As we approach the 20th episode of the “Stock of the Week” series, I would love your feedback!
Each week, “Stock of the Week” highlights a standout stock, whether driven by strong newsflow or a unique market position. We break down the latest developments, analyze the potential, and offer insights to help investors make informed decisions.
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The week, we are focusing on Veeva. The company has just reported strong earnings and is showing solid momentum. What is driving the news? Where are the buy zones? What risks should investors watch? Find out in this article!
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One Pager
The stock at a glance!
Recent news
Insider activity shows a trend of modest selling, though the overall volume of shares sold remains relatively low
Veeva continues to enhance its product portfolio, most notably with the launch of Veeva AI, which integrates intelligent automation across its platform to better serve the life sciences industry
However, competitive pressure is rising. Takeda, a top 20 Japanese pharmaceutical company, recently selected Salesforce Life Sciences Cloud for its commercial operations, becoming the second major pharma firm to move away from Veeva following the conclusion of their Salesforce partnership
Meanwhile, the broader life sciences sector is experiencing slow growth and caution around large investments. This trend is also reflected in the performance of equipment manufacturers such as Agilent, Thermo Fisher, and Waters
Last earnings report
In the first quarter, Veeva reported strong results with 17% revenue growth and a 40% increase in EPS. However, stock-based compensation (SBC) also rose by 17%, now accounting for approximately 15% of revenue or roughly half of net income.
Revenue contributions from Commercial and R&D solutions remain relatively balanced.
The company raised its full-year guidance to $3.09B in revenue. Veeva also reaffirmed its long-term target of reaching a $6B run rate by 2030, which stands significantly above current analyst consensus.
Analysts’ recommendations
May, 29. UBS. Hold. $250 —> $285
May, 29. Truist. Hold. $217 —> $230
May, 29. Morgan Stanley. Sell. $201 —> $210
May, 29. RBC. Buy. $285 —> 330
My analysis
From a business standpoint, Veeva stands out as one of the most compelling software stocks. The company continues to deliver strong growth, operates in a dominant position within a specialized niche, and benefits from multiple tailwinds, including opportunities in AI, new feature rollouts, and potential acquisitions
Veeva also boasts a robust cash position, equivalent to more than 4 years of EBITDA. Strategically invested, it boosts net income by over 25% while serving as a valuable reserve for future acquisitions
However, two major concerns weigh on the investment case. First is the persistently high level of stock-based compensation (SBC), which shows little sign of moderation. This ongoing dilution significantly erodes shareholder value and appears more aligned with rewarding top management than genuine talent retention
Second is valuation. While Veeva is a high-quality, cash-generative business, the current price offers limited margin of safety, especially considering ongoing risks such as intensifying competition. A more attractive entry point would better balance the risk-reward profile
Technical analysis
I have defined three buying zones that I find interesting for long-term investments during pullbacks. While these zones may not be reached, I am prepared for a market (or stock) consolidation to seize long-term opportunities. For me, this approach offers a better risk/reward ratio.
Of course, this is just my opinion, and I am sharing it with you, but each investor should decide on their own investment style. With that said, here are my three buying zones for Veeva.
Buying zone 1. $250
Buying zone 2. $210
Buying zone 3. $175
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Used source: Marketscreener.com. Affiliate link just here
Great company but sbc is a huge red flag