Where Will Veeva Systems Stock Be in 10 Years?

Veeva Systems (NYSE:VEEV), a software solutions provider for the life sciences industry, has seen some weakness amid the slowdown in cloud market demand as organizations cope with macro woes.

While the company saw its shares slumping by around 32% over the past three years, the stock is gaining back momentum, with encouraging financial reports showing strength.

The stock has gained around 8% this year and it has not disappointed investors who held over the long haul, delivering nearly 630% returns over the past decade.

So what does the future hold for Veeva? Where is it headed over the next decade?

Veeva Sits In a Market Primed For Fast Growth

According to the International Data Corporation, the Life Sciences industry is expected to be among the fastest growth ones thanks to cloud spending acceleration through 2028 of around 23% CAGR. This offers a glimpse into the huge market opportunity for Veeva Systems and hints at the growth that may be around the corner.

Management assess the company’s total addressable market in the life sciences industry to be $20 billion while MedTech and Biopharma combined add up to a $2 trillion market. Veeva has only made a small dent in its TAM to-date, suggesting the future may be even brighter.

A big question looms on valuation now, however, because the stock is trading more than 50% higher than the industry peers on a forward non-GAAP earnings multiple, which sits at 32.93. For the bulls, there is hope because that’s around 45% below its five-year average.

Also, the forward price-to-sales ratio of 12.27 is substantially higher than the median but 32.5% below its five-year average.

Analysts see the stock climbing by around 14% in the next 12 months, so will it maintain a steady and positive long-term trajectory?

1,432 Reasons to Buy Veeva?

Veeva Systems breaks down its opportunities into 3 areas, which are Veeva Development Cloud and Veeva Commercial Cloud, and one more platform known as Veeva Data Cloud. These relate to pharma, biopharma, and the medical devices industry, as well as to research and marketing segments.

The company serves 1,432 customers across the life sciences industry and they range from pharmaceutical and biotechnology to medical device organizations as well as contract sales and research companies.

Some of Veeva’s clients include Bayer AG, Eli Lilly, Gilead Sciences, and Novartis, among others, while on the emerging companies’ side, Alkermes, Alnylam Pharmaceuticals, and Idorsia Pharmaceuticals are also served. Even the consumer products industry is served by Veeva to some extent.

On the product side, Veeva offers a clinical platform to support trials via Veeva Site Connect, which recently signed up its seventh top 20 biopharma client. Furthermore, the Veeva Clinical Database, which enhances trial productivity, has been implemented by seven out of the top 20 biopharmaceutical companies.

Veeva’s product and customer reputation also won over the number one ranked biopharma using its full Vault RIM Suite in regulatory tasks and Vault CTMS in clinical operations. The company also increased its penetration among emerging biotechs, taking on 12 new Vault Basics customers since April alone.

Top Line Growing Impressively 

Last quarter, total revenues came in at $676.2 million, an increase of 15% year over year, while subscription services revenues rose 19% year-over-year to $561.3 million.

Management reported net income on a GAAP basis of $171.0 million, compared to $111.6 million in the prior year’s quarter, representing an increase of 53% year-over-year. Non-GAAP net income increased by 35% year over year to $267.3 million. More good news flowed with non-GAAP net income per share coming in at $1.62, compared to $1.21 in the year-ago quarter.

The company’s revenue and EPS for the second quarter were better than the forecasted guidance and topped Wall Street estimates for the trailing four quarters.

For the fiscal third quarter that will end on October 31, 2024, Veeva expects total revenues in the range $682 million and $685 million, while non-GAAP net income per share is expected to land between $1.57 and $1.58 per share.

The company expects its total revenues to come in the range of $2.70 and $2.71 billion for the fiscal year. Plus, its non-GAAP EPS for the year is expected to come in at $6.22, higher than the previously expected $6.16, showcasing management’s confidence in where the business is headed.

Where Will Veeva Systems Stock Be in 10 Years?

Veeva Systems is expected to climb to $243 per share, a 19% increase from present levels, over the next 10 years according a discounted cash flow forecast analysis.

Analysts peg fair value closer to $233 per share, though the range of estimates is wide from $173 per share at the low end to $281 per share at the high end.

It certainly appears that Wall Street is increasingly leaning bullish with 22 of the 27 covering the stock upgrading their earnings forecasts for the coming period.

New buyers should probably be cautious though because the price-to-earnings multiple of 53x is elevated and particularly when contrasted with forecasted 5-year net income growth of 25%. Still, cash flows are strong and in recent years nearly approach the billion dollar level annually.

Veeva Systems is clearly doing a good job in catering to customers’ needs and staying relevant in the highly competitive cloud market.

Management has also consistently delivered better-than-expected results that pleased investors.

Veeva’s fundamentals and prospects should support it perform steady growth over the coming decade and its history of low volatility offer an attractive alternative to conservative-minded investors looking for some diversification from headline stocks in the tech industry, yet wanting exposure to cloud-based technology solutions.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.