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Veeva Systems (VEEV) to Report Q2 Earnings: What's in Store?

Zacks Equity Research

Veeva Systems Inc.’s VEEV second-quarter fiscal 2020 results are scheduled to release on Aug 27, after market closes. The company is set to gain from its core Subscription Services unit and a strong view for the quarter to be reported. However, intense competition in the healthcare IT space is a headwind.

In the last reported quarter, the company delivered a positive earnings surprise of 11.1%. Further, it has a positive average surprise of 14.2% for the trailing four quarters.

Let’s take a look at how things are shaping up prior to this announcement.

Which Way Are Q2 Estimates Treading?

The Zacks Consensus Estimate for fiscal second-quarter earnings is pegged at 49 cents, suggesting an improvement of 25.6% from the year-ago quarter. The same for revenues is pegged at $259.3million, indicating growth of 23.7% from the year-ago reported figure.

Veeva Systems Inc. Price and EPS Surprise


Veeva Systems Inc. Price and EPS Surprise

Veeva Systems Inc. price-eps-surprise | Veeva Systems Inc. Quote

Factors to Influence Fiscal Q2

The company is likely to report higher revenues at its Subscription services segment in the to-be-reported quarter. In the last reported quarter, the segment accounted for 80.9% of revenues. It is encouraging to note that the Zacks Consensus Estimate for the unit’s second-quarter revenues stands at $213 million, reflecting a year-over-year rise of 25.3%. Notably, a slew of positive developments are expected to have bolstered Veeva Systems’ customer base, which in turn is likely to have driven Subscription revenues.

For instance, Veeva’s Vault eTMF has been adopted by Celltrion, a top South Korean biopharmaceutical company, for streamlining clinical operations. Additionally, the company’s Vault Submissions and Vault Submissions Archive have been implemented by Japan’s Sumitomo Dainippon Pharma. This is likely to have boosted Veeva’s Vault RIM suite. (Read More: Veeva's Submissions & RIM Implemented by Sumitomo Dainippon)

Veeva has also added new CRM customers in the United States and Europe of late.

Reflective of these, the company has issued an upbeat guidance for the fiscal second quarter.

Notably, the company expects revenues within $259 million and $260 million. Adjusted earnings per share are projected within 48-49 cents.

Adjusted operating income is estimated in the range of $94-$95 million.

Meanwhile, Veeva faces stiff competition across most of its product lines, which is likely to show on margins.

Here’s What the Quantitative Model Predicts:

Our proven Zacks model clearly shows that a company with a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has fair chances of beating estimates if it also has a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Veeva Systems has a Zacks Rank #3 and an Earnings ESP of 0.00%, a combination that makes surprise prediction difficult.

Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Worth a Look

Here are a few stocks which have the right combination to post an earnings beat this season.

The Cooper Companies COO has an Earnings ESP of +1.50% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Costco Wholesale COST has an Earnings ESP of +0.30% and a Zacks Rank #3.

Burlington Stores BURL has an Earnings ESP of +1.13% and a Zacks Rank #2.

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