Weakness in Veeva (VEEV) on Cegedim Deal is Buying Opportunity - Canaccord

Canaccord Genuity is getting bullish on Veeva Systems (NYSE: VEEV) following news that Cegedim is selling its CRM unit.

Analyst Richard Davis notes that any valuation implications that might hit Veeva shares would make him a buyer. The analyst commented, The obvious explanation is the disparity in growth and projected CRM share shifts in the space; however, admittedly the valuation gap is larger than we would have expected. On the positive side, from a fundamental perspective, it’s likely in the near-term that Veeva could accelerate the pace at which it is winning business from Cegedim in the wake of the sales/product disruption that follows nearly every acquisition of this kind.

While we have never had real concern about Cegedim from a product standpoint (Veeva has a far more comprehensive, cloudbased solution), there was always a worry that Cegedim could execute pricing leverage, as pharma companies spend so much money with the firm already that they could meaningfully discount CRM sales. The same holds true with IMS, which already has strong pharma relationships with its prescription sales data business, and has been making acquisitions to move up the technology stack. If IMS were to meaningfully change/cut Cegedim CRM prices, which at this point we have no reason to believe will happen, it could put added competitive pressure on Veeva, Davis noted.

Canaccord has Veeva at Buy with a price target of $30.

For an analyst ratings summary and ratings history on Veeva Systems click here. For more ratings news on Veeva Systems click here.

Veeva Systems closed at $24.78 yesterday.

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