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On Thursday, Veeva Systems (NYSE:VEEV), a software company with a market capitalization of $38.4 billion and an impressive gross profit margin of 74.5%, received a reaffirmation of a Buy rating and a $272.00 price target from Stifel analysts following the company’s fourth-quarter earnings report. The report showed a year-over-year revenue increase of 14%, which positively impacted both margins, at 43%, and earnings, with a 26% rise compared to the previous year. According to InvestingPro, the company maintains excellent financial health with a "GREAT" overall score, supported by strong profitability and cash flow metrics.
The company’s guidance for FY26 also surpassed expectations, indicating an 11% revenue and EPS growth, which is higher than the consensus of 11% for revenue and 5% for EPS. This optimistic guidance led to a 7% increase in Veeva’s stock price in after-market trading. The guidance for subscription growth was particularly strong at 14%, accounting for approximately 85% of the company’s revenue. Research and development (R&D) is expected to grow by 18%, outpacing the more mature commercial segment’s 8% growth.
Veeva’s projections for professional services are approximately flat year-over-year, which analysts believe is a reasonable and potentially conservative estimate. The margin guidance is 200 basis points above the consensus, reflecting a 70 basis point year-over-year increase, attributed to a mix shift and a focus on efficiency.
The company’s billings growth, set at 11%, is in line with the consensus for FY27 revenue growth. Stifel’s commentary recognizes the strength of Veeva’s report and guidance. While their long-term thesis on the stock remains unchanged, they note near-term risks to relative performance. This includes the potential for most of Veeva’s top 20 pharmaceutical customers to decide within the next 18 months whether to continue with Veeva’s services versus those of Salesforce (NYSE:CRM), which may pose headline risk and affect revenue over multiple years.
Market perceptions that Veeva’s margins may be unsustainably high during the CRM transition were also mentioned as a potential concern. Despite these risks, Veeva’s stock is currently trading at 27 times the FY26 estimated free cash flow, with a P/E ratio of 57.75. While this valuation appears high, Stifel analysts consider it reasonable for a company that is expected to grow its revenue by double digits and meets the rule of 40+ criteria for stock growth. InvestingPro’s Fair Value analysis suggests the stock is slightly undervalued, with strong fundamentals including a healthy current ratio of 4.51 and minimal debt exposure.
In other recent news, Veeva Systems reported strong fourth-quarter financial results, with total revenue reaching $720.9 million, a 14% increase from the previous year, surpassing expectations. Earnings per share also exceeded forecasts, coming in at $1.74. The company provided guidance for fiscal year 2026 that, adjusted for foreign exchange impacts, was ahead of market consensus. Analysts have reacted to these developments with various adjustments to their price targets for Veeva Systems. TD Cowen raised its price target to $261, citing improved R&D dynamics and robust operating income margins. RBC Capital maintained an Outperform rating with a $285 price target, highlighting Veeva’s strong subscription growth and execution. Truist Securities increased its target to $217, acknowledging the company’s better-than-expected results and future prospects. Evercore ISI also raised its price target to $250, noting the company’s strong profitability and effective business execution. Meanwhile, Raymond (NSE:RYMD) James adjusted its target to $285, emphasizing Veeva’s broadening product suite and market influence.
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