On Wednesday, Mizuho (NYSE:MFG) Securities initiated coverage on shares of Veeva Systems (NYSE:NYSE:VEEV), a cloud-based software provider for the life sciences industry, with an Outperform rating and a price target of $275.
The firm's analysis indicates that Veeva continues to lead the market in Life Science Commercial and Development (R&D) Cloud solutions. They anticipate the company's top-line growth to persist in the mid-teens range through fiscal year 2028, citing that Veeva has only reached approximately 14% penetration in its over $20 billion total addressable market (TAM).
Veeva's overall revenue growth has seen a resurgence this year, following a period of reduced spending by end customers. This rebound is aligned with Mizuho's analysis of year-to-date spending trends in big BioPharma R&D for 2024. Further bolstering the company's outlook is the projection that global R&D funding is expected to grow by 45-50% in 2024, potentially leading to an increase in clinical trial starts in 2025, based on historical patterns.
The firm suggests that Veeva Systems should trade at a 40% discount to its five-year historical average price-to-earnings (P/E) multiple of 56 times. Currently trading at a P/E ratio of 59.4x, the stock is near its 52-week high of $240.68. The $275 price target is derived from a 35 times P/E multiple applied to the projected calendar year 2026 earnings per share (EPS) of $7.90.
With a projected 20% upside, Mizuho has given Veeva Systems an Outperform rating to reflect the positive outlook. For deeper insights into Veeva's valuation and 13 additional ProTips, check out the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Veeva Systems has been the focus of several analyst firms due to its strong financial performance and strategic initiatives.
Veeva's third-quarter results, which concluded at or above guidance, showcased a robust gross profit margin of 73.35% and revenue growth of 15.29%. This led to Baird maintaining an Outperform rating on the company's shares.
Simultaneously, Truist Securities held its rating on Veeva's stock, indicating stable earnings expectations. Scotiabank (TSX:BNS) initiated coverage on Veeva with a Sector Perform rating, highlighting the company's significant market opportunity. Piper Sandler, acknowledging Veeva's ambitious growth plans, upgraded its price target on the stock to $280 from $230, maintaining an Overweight rating.
These are recent developments that have drawn attention to Veeva's operational efficiency and potential for growth. The company has also made strategic moves such as forming a partnership with Walgreens and expanding its clinical trial platform, Veeva Site Connect. These initiatives underscore Veeva's commitment to enhancing its market position in the life sciences sector.
Investors are now looking forward to Veeva's fourth-quarter results and potential Top 20 awards announcement, which will provide further insights into the company's ongoing growth trajectory.
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