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Veeva Systems Inc. VEEV offers cloud-based solutions for the pharmaceutical and life sciences industries. The stock has crushed the broader tech sector over the last five years and its growth outlook remains strong.
But VEEV is trading nearly 15% below its records heading into its Q3 earnings release that’s due out after the closing bell on Wednesday, December 1. And investors might want to consider buying Veeva stock on the dip for longer-term tech growth.
Veeva sells cloud-based offerings geared toward the pharmaceutical and life sciences industries. The company helps its roughly 1,100 clients improve and streamline their critical business functions, with software and services geared to everything from research and development and regulatory processes to training and nearly anything else a firm in these fields might need.
VEEV’s clients include biotech startups, pharmaceutical powerhouses, and beyond. The firm’s overall goal is to help “companies of all sizes bring products to market faster and more efficiently, and maintain compliance.”
The California-based firm’s offerings have caught on around the industry and its subscription-focused offerings have helped it grow rapidly and steadily. Veeva has grown its revenue by at least 25% every year since it went public in 2013, including 33% sales growth last year (its fiscal 2021).
VEEV topped our Q2 earnings and revenue estimates in September, with sales up 29% and adjusted earnings 30% higher. Zacks estimates call for Veeva to continue its impressive top-line growth trend, with fiscal 2022 revenue set to climb by 25% to reach $1.83 billion. The company is also projected to post 21% higher adjusted earnings.
Looking ahead to next year, Veeva is projected to post another 15% earnings growth on nearly 20% higher revenue. The company has also consistently beaten our bottom-line estimates and its overall adjusted EPS outlook has improved since its last report to help it grab a Zacks Rank #2 (Buy) right now.
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Veeva stock has skyrocketed 520% in the last five years and 105% in the past 24 months to easily outpace its industry during both periods. A recent slowdown might set up an enticing buying opportunity, with VEEV up only 6% in the last year vs. its industry’s 18% climb.
The stock closed regular trading Monday about 14% below its August records. The recent drop does have Veeva sitting below both its 50-day and 200-day moving averages recently.
But its current Zacks consensus price target represents over 17% upside to its current levels and the stock began to pop above oversold RSI levels (30 or under) last week. And Veeva stock could still have plenty of runway left since it only hovers at 38. Meanwhile, the Nasdaq 100-tracking QQQ ETF is at 60, after falling below overbought RSI levels early last week.
Veeva’s pullback has cooled off its valuation as well, with it trading at 30% discounts to its own year-long highs in terms of both forward earnings and sales. Plus, 13 of the 17 brokerage recommendations Zacks has for the stock are either “Strong Buys” or “Buys.” On top of that, VEEV boasts a solid balance sheet and its cloud software and services cater to vital industries.
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