Evercore ISI has increased its price target on shares of Veeva Systems (NYSE: NYSE:VEEV) to $220 from $200 while maintaining an In Line rating, with the adjustment following Veeva's reported second-quarter earnings, which surpassed both the analyst's and the Street's expectations.
The company's total revenue reached $676.2 million, marking a 15% year-over-year increase and outperforming estimates of $667.5 million and $667.8 million. Its earnings per share (EPS) of $1.62 also exceeded the anticipated $1.53.
Veeva's billing for the quarter was reported at $611 million, an 11% increase, which is above the expected $605.9 million. This was largely attributed to robust bookings. Despite the uncertain macroeconomic conditions, Veeva raised its subscription revenue and billings guidance for the second half of the year, fueled by a significant development cloud contract with a top 20 biopharmaceutical company and Vault Basics gaining traction with 12 new customers.
The company's annual guidance remained mostly unchanged at $2.707 billion at the midpoint. However, subscription revenue guidance was revised upward to $2.257 billion, representing a 14% increase. This revision offsets an incremental $12 million headwind on Professional Services. Operating income and EPS forecasts were also slightly increased to $1.08 billion and $6.22, respectively.
Evercore ISI highlighted Veeva's AI partnerships, which now encompass around 30 use cases, as a potential counterbalance to the friction AI previously caused in the sales pipeline. The analyst firm also noted the Data API's capability to gather data 100 times faster as a significant upsell opportunity for customers. Despite concerns regarding CRM's partnership with IQVIA, Veeva continues to secure new deals across all business lines, adding 14 new Vault CRM customers last quarter.
The report also mentioned a decrease in professional services revenue by approximately $12 million for the year as some clients chose to work directly with third parties. Management indicated that it is too early to determine if this trend will continue, but it does not necessarily reflect a loss in new customer acquisition.
Internal cost controls and reduced headcount additions have contributed to an increase of about $10 million in operating income for the remainder of the fiscal year.
In other recent news, Veeva Systems has reported strong fiscal second-quarter results for 2025. The company announced a total revenue of $676 million and a non-GAAP operating income of $280 million.
In addition, Veeva Systems has launched new products, including Veeva Site Connect and Service Center, and anticipates the release of the next Vault CRM in the fourth quarter.
Veeva Systems has indicated about 5% year-over-year growth in Q3 billings, with a stronger quarter anticipated in Q4. The company continues to focus on growth and execution, as evident in its latest product releases and strategic expansions.
InvestingPro Insights
Evercore ISI's increased price target for Veeva Systems aligns with several key financial metrics and InvestingPro Tips that suggest a robust financial position for the company. Notably, Veeva Systems holds more cash than debt on its balance sheet, indicating financial stability and a potential buffer against market volatility. Additionally, analysts predict the company will be profitable this year, a forecast supported by the company's performance over the last twelve months.
From a valuation perspective, Veeva Systems is trading at a high earnings multiple, with a P/E Ratio of 57.97 and an adjusted P/E Ratio for the last twelve months as of Q1 2023 at 60.08. While this may suggest a premium valuation, the company's liquid assets exceed its short-term obligations, providing further evidence of its solid financial health. Moreover, with a gross profit margin of 72.48% in the same period, Veeva Systems demonstrates a strong ability to retain earnings from its revenue.
Investors considering Veeva Systems should be aware that the company does not pay dividends, which could be a factor for those seeking income-generating investments. For a more comprehensive analysis, including additional InvestingPro Tips related to Veeva Systems, interested readers can visit https://www.investing.com/pro/VEEV, where 11 more tips are available, providing deeper insights into the company's performance and valuation.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.