On Thursday, Truist Securities revised its price target for Veeva Systems (NYSE:VEEV) shares, a cloud-computing company focused on pharmaceutical and life sciences industry applications, to $197 from the previous $203, while retaining a Hold rating on the stock.
The adjustment follows Truist Securities' update to its financial model for Veeva Systems, affecting revenue and earnings projections for fiscal years 2025 and 2026. The firm now anticipates revenue of approximately $2.71 billion for FY2025, down from the prior estimate of $2.73 billion. For FY2026, the revenue forecast has been adjusted to roughly $3.05 billion from an earlier prediction of $3.07 billion.
Similarly, the adjusted EBIT (earnings before interest and taxes) estimates have been modified. Truist Securities expects Veeva Systems to achieve an adjusted EBIT of about $1.07 billion in FY2025, slightly below the previous estimate of $1.071 billion. For FY2026, the adjusted EBIT estimate is now set at approximately $1.22 billion, a decrease from the former forecast of $1.25 billion.
The revised earnings per share (EPS) estimates for Veeva Systems are now $6.16 for FY2025 and $6.79 for FY2026, which show a slight change from the earlier projections of $6.16 and $6.95, respectively.
Additionally, the normalized billings forecast has been reduced to $2.87 billion for FY2025 and $3.29 billion for FY2026, compared to previous estimates of $2.91 billion and $3.31 billion.
Despite the downward revision in financial estimates, the price target of $197 still implies a valuation based on an unchanged 25 times enterprise value to EBITDA (EV/EBITDA) multiple on the updated calendar year 2025 estimate.
This multiple is a common valuation metric used to compare the value of a company, including debt, to the company's cash earnings less non-cash expenses. It's an important measure for assessing the relative value of companies within the same industry.
In other recent news, Veeva Systems Inc., a leading provider of cloud-based software for the life sciences industry, has been the focus of various analysts due to recent developments. The company reported a strong performance in its Commercial segment and surpassed expectations in terms of billings, revenue, EBIT, and EPS.
However, Veeva Systems adjusted its FY25 forecast downward by approximately 1% for both billings and revenue due to shifts in the timing of Enterprise deals and reductions in the SMB segment within the R&D Solutions.
Despite this, Baird, Piper Sandler, and Citi maintain an Overweight or Buy rating on the company's stock, but they have reduced their price targets to $245, $235, and $256 respectively. Stifel also maintains a Buy rating but has lowered its price target to $210.
These adjustments reflect the analysts' confidence in Veeva's strategic direction and market position, despite potential near-term execution risks and uncertainties surrounding R&D budgets.
Veeva Systems continues to face competitive pressures, particularly from Salesforce (NYSE:CRM) and IQVIA, which are expected to create a CRM platform that could directly compete with Veeva's offerings.
Despite these challenges, Veeva's strong market share and long-standing customer relationships position it as a dominant player in the industry. The company's focus on securing successful customer migrations to its Vault-based CRM platform is critical in maintaining its competitive edge.
These recent developments highlight Veeva Systems' ability to navigate a dynamic market landscape and maintain its robust subscription model, despite facing several challenges. The company's financial health and outlook remain a subject of interest for potential investors.
InvestingPro Insights
According to InvestingPro data, Veeva Systems (NYSE:VEEV) holds a market capitalization of $30.54 billion, with a Price/Earnings (P/E) ratio of 54.76, reflecting a market expectation of continued earnings growth. The revenue for the last twelve months as of Q1 2023 stood at $2.49 billion, showcasing a robust growth of 14.31%. These figures highlight the company's strong financial position and its ability to generate significant revenue in a competitive industry.
Two notable InvestingPro Tips for Veeva Systems include the fact that the company holds more cash than debt on its balance sheet and that 15 analysts have revised their earnings upwards for the upcoming period. These insights suggest a strong financial foundation and a positive outlook among market experts, which could be of interest to investors considering the recent price target revision by Truist Securities. Additionally, for investors seeking more comprehensive analysis, there are over ten additional InvestingPro Tips available at InvestingPro's platform for Veeva Systems. Use the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing access to a deeper dive into the company's financial metrics and expert forecasts.
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