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Technology Standout Veeva's Growth Has Only Just Begun, CEO Says

Jeran Wittenstein

(Bloomberg) -- Veeva Systems Inc. has emerged as one of the best-performing technology stocks in 2019 by consistently delivering better-than-expected revenue growth. Chief Executive Officer Peter Gassner said his life-sciences software company’s expansion is just getting started.

“I was at Salesforce.com very early, so I know what it’s like,” Gassner said in an interview. “We’re just early.”

Veeva is expected to post a 24% increase in second-quarter revenue after markets close Tuesday. That would put it on track to exceed $1 billion in annual sales, according to the average of analyst estimates compiled by Bloomberg. The company hasn’t missed Wall Street revenue estimates since it went public in 2013. The stock is up more than eightfold over that period and 82% since the start of this year. The 2019 gain is better than all 68 members in the S&P 500 Information Technology index.

That precipitous climb may be cause for some caution. The stock trades at 23 times fiscal 2020 revenue estimates, compared with an average multiple of 12 over the past three years. Almost half of the analysts tracked by Bloomberg rate Veeva a hold or equivalent. Their average price target implies a 3% decline over the next 12 months.

Investors are expecting Pleasanton, California-based Veeva to deliver a “beat and raise” earnings report fueled by growth of its cloud-based Vault platform, according to Stifel analyst Tom Roderick. Vault provides pharmaceutical companies a suite of applications for research and development and the commercialization of drugs. Revenue from the unit expanded 41% in the first quarter to $121.7 million.

“Impressive” growth of Vault along with new products such as an application that helps drug companies manage side effects have supported Veeva’s expansion and created a more diversified revenue stream, Roderick wrote in a research note last week. He has a buy rating on the stock.

Veeva is benefiting from an increased focus on personalized medicine that has boosted demand for software that makes the industry more efficient and effective, according to Gassner.

“The life sciences industry is transforming to precision medicine and software is transforming along with it to the cloud,” said Gassner, who was an executive at Salesforce.com Inc. and Peoplesoft Inc. before co-founding Veeva in 2007. “The stars are aligning.”

To contact the reporter on this story: Jeran Wittenstein in San Francisco at jwittenstei1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Richard Richtmyer

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.