VEEV - Veeva: Growth In Dev Cloud Clears Cloudy Skies (Rating Upgrade)
2024-07-06 06:59:01 ET
Summary
- Veeva reported Q1 FY25 earnings report, where revenue grew 24% YoY, exceeding expectations, driven by momentum in the Development Cloud segment with increasing adoption of multiple applications.
- Along with robust product innovation across its Development and Commercial Cloud Segment, the company also streamlined its operating expenses, thus expanding profit margins to 40.1%.
- Although the downward revision to revenue guidance in FY25 dampened investor sentiment, the management attributed it to macroeconomic headwinds.
- Looking at the big picture, I believe that Veeva should return to growing in the high teens as its product innovations drive higher market share, making it a “buy”.
Introduction & Investment Thesis
Veeva ( VEEV ) is a cloud software company that develops CRM software for the Life Sciences industry. The company has underperformed the S&P 500 and Nasdaq 100 YTD. I last wrote about the company on March 5th, where I upgraded my rating from “sell” to “hold” based on my belief that there were growing signs of optimism with revenue and profit margins projected to improve in FY25, especially with faster than expected growth in its Development Cloud segment that houses its R&D Solutions. However, based on my valuation, my upside looked capped given future growth projections. Since then, the stock has declined 18%....
Veeva: Growth In Dev Cloud Clears Cloudy Skies (Rating Upgrade)