On Friday, Canaccord Genuity adjusted its price target for Veeva Systems (NYSE:VEEV), a cloud-computing company specializing in pharmaceutical and life sciences industry applications. The firm reduced its price target from the previous $220.00 to $210.00 but maintained a Hold rating on the stock.
The revision of the price target is based on Veeva's updated forecast for fiscal year 2025, which indicates a slowdown in growth. The company now expects an 11% increase in revenue, a slight decrease from its earlier 12% projection. This includes a 13% growth in subscription services, down from the previously anticipated 14%, and a minimal 1% growth in service revenues, a drop from the former 6% expectation.
Veeva Systems has also revised its billing growth outlook to 10%, a decrease from the 12% previously projected. The reduction in growth estimates is primarily due to delayed implementation timelines, which have particularly impacted the services segment of the company's revenue.
Despite the lower revenue projections, Veeva's management has reaffirmed its operating income target, suggesting a non-GAAP operating margin (NGOM) of approximately 39%. This margin reflects a modest year-over-year increase of about 100 basis points when adjusted for the impact of TFC, a transactional foreign currency component.
Looking ahead, Veeva management has indicated that it is on course to reach its long-term revenue goal of $3 billion within the calendar year 2025. This target remains in place despite the recent adjustments to the company's shorter-term financial outlook.
InvestingPro Insights
Following the recent adjustments in Veeva Systems' financial outlook, it's essential for investors to consider the latest market data and analysis. As of the last twelve months leading up to Q4 2023, Veeva Systems holds a market capitalization of $31.38 billion and is trading at a high P/E ratio of 58.73, reflecting investor expectations of future earnings. Despite the high earnings multiple, it's noteworthy that Veeva Systems maintains a strong balance sheet, holding more cash than debt, which is a positive signal for financial stability.
InvestingPro Tips indicate that Veeva is trading at a high P/E ratio relative to near-term earnings growth, with a PEG Ratio of 8.4. Additionally, the company's stock generally trades with low price volatility, which may appeal to investors looking for stable investment opportunities in the tech sector. For those interested in further insights, there are 12 additional InvestingPro Tips available, which can provide a deeper analysis of Veeva's financial health and market performance.
Investors looking to explore these tips can do so by visiting InvestingPro's dedicated page for Veeva Systems at https://www.investing.com/pro/VEEV. Moreover, for those considering a subscription, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to valuable investment analytics and data.
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