2024-03-05 11:47:57 ET
Summary
- Veeva's revenue and margins are expected to improve in FY25, driven by growth in its R&D Solutions segment.
- The company faces macroeconomic risks and uncertainties related to its platform migration project and revenue concentration among top customers.
- The current valuation of Veeva's stock has already priced in its growth prospects, leaving limited upside for long-term investors.
Introduction & Investment Thesis
On January 8, 2023, I initiated a "sell" rating on Veeva ( VEEV ). I had outlined that my bear thesis was predicated on the fact that the company had seen its revenue growth and margins stagnate over the last 2 years, in an environment where there were growing uncertainties around Veeva's product adoption as pharmaceutical budgets came under greater scrutiny. At the same time, I believed that the stock price at that time did not reflect the unknown impact on the company's top line from its platform migration project, as well as the growing threat of competition from companies such as Salesforce ( CRM ), Microsoft ( MSFT ), Google ( GOOG ) (GOOGL) and IQVIA ( IQV ). I had set a price target of $154, but since the time of my writing, the stock has climbed 18%....
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Veeva: Growth Prospects Have Improved, But Stock Price May Be Capped