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Earnings Preview: Veeva (VEEV), Palo Alto Networks (PANW), Workday (WDAY)

Benjamin Rains

The first quarter of 2019 has seen overall S&P 500 earnings and revenue expansion come in below recent periods. With that said, total technology industry earnings are down 7.7% from the year-ago period thus far. This is much worse than total S&P earnings for the roughly 94% of the index’s membership that have already reported.

So, let’s look at what investors should expect from some of the more notable tech companies still left to report: Veeva Systems Inc. VEEV, Workday, Inc. WDAY, and Palo Alto Networks, Inc. PANW.

Quick Quarterly Overview

As we touched on already, total earnings for the 468 S&P 500 members, or 93.6% of the index’s total membership, that had reported their results through Wednesday, May 22, were up +0.1%. On top of that, revenues were up 4.8%, with 76.7% beating EPS estimates and 59.6% beating revenue estimates. Looking ahead, total Q1 earnings for the S&P 500 are projected to be down -0.2% on 5% higher revenues. Investors will notice this would be far below recent periods.

Total earnings for the tech sector, with 85.1% of Tech companies in the S&P 500 reported, are down -7.7% on 3.1% higher revenues. Furthermore, 82.5% have topped EPS estimates and 71.9% beat revenue estimates, which is a weaker showing than in recent periods. Apple AAPL and semiconductor industry giants like Intel INTC, Advanced Micro Devices AMD, and Micron MU, were a huge drag on the sector (also read: Retail Sector Fails to Impress).

 

 

Workday, Inc.

Workday offers an array of enterprise-level cloud applications for finance and human resources. Shares of WDAY have climbed 57% over the last year to crush its industry’s 4% average climb. More recently, Workday stock is up nearly 30% in 2019 and sits just a few dollars per share below its 52-week high at around $205.50 per share.

Moving on, the company’s first-quarter revenue is projected to climb 31.7% to reach $814.68 million, based on our current Zacks Consensus Estimate. Last quarter, the company’s revenue jumped by 35.4%. At the bottom end of the income statement, WDAY’s adjusted quarterly earnings are expected to climb 24.4% to hit $0.41 per share. Furthermore, Workday has destroyed our earnings estimates by an average of 45% over the last four quarters.

WDAY is a Zacks Rank #3 (Hold) at the moment that rocks an “A” grade for Growth in our Style Scores system. The Pleasanton, California-based company is scheduled to release its fiscal 2020 first quarter financial results after the market closes on Tuesday, May 28.

Veeva Systems Inc.

Shares of VEEV have soared roughly 57% in 2019, to help extend its impressive three-year run that has seen its stock price skyrocket 375%. Veeva offers cloud-based solutions for the pharmaceutical and life sciences industries and boasts more than 700 customers, which include pharmaceutical giants and biotech firms such as Eli Lilly LLY and Biogen BIIB. The firm’s main offerings are presented in a software-as-a-service model and deliver industry-specific tools for CRM, content management, and many other enterprise applications.

The company is coming off a fourth quarter of its fiscal 2019 that saw its revenue jump 25%. With this in mind, our current Zacks Consensus Estimate calls for Veeva’s adjusted Q1 earnings to climb 36.4% to reach $0.45 per share. Meanwhile, the firm’s first-quarter revenue is projected to jump 22.1% to hit $238.68 million. Veeva has topped our quarterly earnings estimates by an average of 13.9% in the trailing four periods. The firm has also seen its earning estimate revision picture turn more positive recently to help VEEV earn a Zacks Rank #2 (Buy).

Veeva is scheduled to release its first-quarter fiscal 2020 financial results after the market closes on Wednesday, May 29. VEEV stock rested at around $140 per share through mid-afternoon trading Thursday, down not too far off its 52-week intraday high $145.70.

Palo Alto Networks

Pale Alto Networks is a cybersecurity firm that boasts over 60,000 customers around the world and has worked with 85 Fortune 100 firms. More specifically, Palo Alto Networks has partnered with Amazon AMZN, Google GOOGL, and Microsoft MSFT to help secure their massive public clouds. Shares of the Santa Clara, California-based company have popped roughly 15% this year, which falls below its industry’s 20% average climb. PANW stock is up around 4% over the last 12 months and hovered at around $216 per share through mid-afternoon trading Thursday. This marked an approximately 17% downturn from its 52-week highs.

Looking ahead, PANW’s adjusted Q3 fiscal 2019 earnings are projected to jump 26.3% to touch $1.25 per share. Meanwhile, the company’s revenue is expected to climb over 24% to reach $703.44 million. PANW has topped our quarterly earnings estimate by an average of nearly 12% over the trailing four quarters.

Palo Alto Networks is currently a Zacks Rank #3 (Hold) and is set to report its Q3 FY2019 earnings metrics after the market closes on Wednesday, May 29.

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