Evercore ISI downgrades Veeva Systems stock PT on revised guidance

On Friday, Evercore ISI adjusted its target price on Veeva Systems (NYSE: ), a cloud computing company focused on applications in the pharmaceutical and life sciences industries, to $200 from the previous price of $230. The company decided to maintain its consensus rating on the stock.

The revision comes as Veeva Systems needs to demonstrate its near-term growth prospects. Despite positive developments for products like Vault CRM, Link, Compass and Vault Basics, the company's reduced guidance puts it in “show me” mode, suggesting investors may remain cautious until subscription revenue forecasts become More certain.

The analyst noted that while the broader market conditions affecting the company are not unique, Veeva Systems could join its peers in struggling on the stock market until there is more confidence in the company's subscription prospects.

Veeva shares were trading at about 21 times expected calendar year 2025 free cash flow (EV/CY25 FCF) enterprise value in after-hours trading, suggesting the market may have cast doubt on fiscal 2025 guidance.

Despite lowering the price target and highlighting challenges, including the lack of a near-term AI monetization strategy and a lack of capital return programs such as share buybacks, which could attract more growth at a reasonable price (GARP) investors, analysts believe that Long-term fundamental issues do not require excessive attention.

The new price target of $200 reflects a multiple of ~25x EV/CY25 FCF, consistent with broad multiple downward revisions across the software industry and Veeva's updated guidance.

Investment Professional Insights

Veeva Systems (NYSE: VEEV ) is at a crucial time in proving its growth prospects, and real-time data from InvestingPro provides a nuanced look at the company's financial health and market performance. Veeva has a market capitalization of $31.38 billion and a price-to-earnings ratio of 58.73 times, indicating investor confidence in its future profit potential. This is further supported by the trailing twelve-month P/E ratio of 62.26 to Q4 2024, which, although high, may be justified by the company's strong fundamentals and market position.

InvestingPro Tips highlights that Veeva holds more cash than debt on its balance sheet, showing that it has solid financial fundamentals. Additionally, the company's liquid assets exceed its short-term debt, providing it with financial flexibility. These insights are critical for investors considering a company's ability to invest in growth opportunities and weather potential market downturns. Additionally, Veeva's revenue grew 9.68% in the trailing 12 months to the fourth quarter of 2024, as Veeva continues to expand despite market challenges.

For investors seeking a deeper understanding of Veeva's financial and strategic outlook, InvestingPro provides additional tips, including insights into the company's trading multiples and stock volatility. There are 12 InvestingPro Tips for investors to use, so that investors can fully understand Veeva's market position. Take advantage of these insights and use coupon codes PRONEWS24 Please visit https://www.investing.com/pro/VEEV to receive an additional 10% discount on annual or two-year Pro and Pro+ subscriptions.

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