Veeva Systems (VEEV) PT Raised to $220 at Evercore ISI
Evercore ISI analyst Kirk Materne raised the price target on Veeva Systems (NYSE: VEEV) to $220.00 (from $200.00) while maintaining a In Line rating.
The analyst comments "Veeva delivered strong F2Q results with total revenue of $676.2mn (+15% y/y), above our/Street estimates of $667.5mn/$667.8mn and EPS of $1.62 also above our/Street estimates of $1.53. Billings came in at $611mn (+11%) vs. expectations of $605.9mn due primarily to strong bookings in the quarter. Despite an uneven macro environment (no change since last quarter), subscription revenue and billings guidance was raised for 2H, powered by a large Veeva development cloud win with a top 20 biopharma and Vault Basics showing signs of momentum with 12 new customers. Key takeaways: 1) Annual guidance was left largely unchanged at $2.707bn at the midpoint, but subscription revenue guidance was bumped to $2.257bn (+14%), offsetting a $12mn incremental headwind on Professional Services. Operating income of $1.08bn (prior: $1.07bn) and EPS of $6.22 (prior: $6.16) were also bumped higher; 2) AI partnerships are continuing to grow with ~30 use cases and are a potential hedge to the friction AI was causing the sales pipeline last quarter. We believe direct Data API, gathering data 100x faster, will continue to be a compelling upsell for customers, and its agnostic approach widely well regarded; 3) Concerns around the impact of CRM’s partnership with IQVIA appear to remain overblown in the short to medium term as VEEV continues to win new deals across all lines of business, for instance adding 14 new customers to Vault CRM last quarter; 4) Raised guidance should be taken as a sign of confidence from mgmt. about the stability of the macro environment going forward, and that more deals are appearing on the radar than previously expected; 5) Professional services revenue has decreased ~$12mn for the year as a few customers have sought to deal with a third party directly. Mgmt noted it is too early to tell if this trend will hold, but we do not view it as a sign of any loss in new customers that it may appear as at first glance; 6) Internal cost controls, and lower headcount additions, have led to ~$10mn more in operating income for the remainder of the FY. This, combined with more wins on the sales front have led to a stronger than expected quarter and outlook. Bottom Line: Given the solid results and what seems like more normalized buying patterns (ex services), we are bumping our PT to $220 or 28.1x EV/CY25 FCF."