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On Thursday, Morgan Stanley (NYSE:MS) updated its stance on Veeva Systems (NYSE:VEEV), a cloud-computing company focused on pharmaceutical and life sciences industry applications, increasing the price target to $210 from the previous $201 while maintaining an Underweight rating on the stock. According to InvestingPro data, Veeva currently trades at $234.49, with a P/E ratio of 53.14, reflecting its premium valuation in the market.
The firm acknowledged Veeva Systems’ adept handling of the challenging environment in the Life Sciences sector, a feat that many of its peers have struggled with. The analyst, representing Morgan Stanley, pointed out that Veeva Systems has managed to navigate the tumultuous backdrop without falling into the same sales pattern pitfalls as other companies operating in this market. This resilience is reflected in the company’s impressive 74.53% gross profit margin and 16.2% revenue growth over the last twelve months.Discover more insights about Veeva’s performance with InvestingPro, which offers 10+ additional exclusive tips and comprehensive financial metrics for informed investment decisions.
Despite the commendation for Veeva’s resilience, Morgan Stanley’s Underweight rating persists, anchored by the perceived risks in the Customer Relationship Management (CRM) market, which accounts for approximately a quarter of Veeva’s revenue. The firm cited developments from competitors like Salesforce (NYSE:CRM), which has been intensifying its focus on the Life Sciences Cloud and Pharma CRM spaces, potentially increasing the competitive pressures on Veeva.
The decision to adjust the price target upward was influenced by a slight increase in Morgan Stanley’s estimates for Veeva Systems and a one-time turn increase in the target multiple, reflecting the company’s strong margin performance. This revised price target suggests a modestly more optimistic valuation of Veeva’s stock by Morgan Stanley while still expressing caution about the company’s future in a competitive CRM market.
In other recent news, Veeva Systems Inc. reported its first-quarter earnings for fiscal year 2026, surpassing market expectations with a total revenue of $759 million, a 17% increase year-over-year. The company’s adjusted earnings per share (EPS) came in at $1.97, exceeding the anticipated $1.79. Veeva also announced billings of $714 million, reflecting a 16% growth, and raised its full-year revenue forecast to approximately $3.095 billion. This performance was notably driven by the Crossix segment, which specializes in healthcare marketing analytics, and has been a key contributor to the company’s success.
Evercore ISI responded to these strong results by increasing Veeva’s stock target to $285 from $240, maintaining an In Line rating. The company’s operating margin stood at a robust 46.1%, significantly higher than the consensus estimate of 42.3%. Veeva’s strategic expansions, including the Vault Customer Relationship Management (CRM) system, have shown accelerated adoption, with the number of live customers expected to increase significantly by next year. Additionally, Veeva is preparing to enter the broader CRM market with a new offering anticipated by the end of 2025.
Despite macroeconomic uncertainties, Veeva remains optimistic, bolstered by its innovative product offerings and strategic focus. The company continues to target growth in its Crossix segment and is exploring potential AI licensing revenue. CEO Peter Gassner emphasized Veeva’s commitment to AI, aiming to enhance life sciences efficiency significantly by 2030.
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