We came across a bullish thesis on Veeva Systems Inc. (VEEV) on Long-Term Pick’s Substack by Dan. In this article, we will summarize the bulls’ thesis on VEEV. Veeva Systems Inc. (VEEV)’s share was trading at $246.19 as of Dec 10th. VEEV’s trailing and forward P/E were 60.79 and 35.46 respectively according to Yahoo Finance.
A doctor utilizing a cloud-based healthcare platform to access patient records.
Veeva Systems (VEEV) has transitioned from being perceived as overvalued to undervalued, reflected in its 17.87% stock price gain since the shift. While the company has been increasing its shares outstanding—a trend often criticized—it remains acceptable given its growth-oriented nature. The market continues to place a high valuation on Veeva, underpinned by its robust business model and strategic positioning.
In its latest earnings report, Veeva outperformed guidance, delivering $699 million in revenue and $304 million in non-GAAP operating income. This was driven by broad adoption across its Development Cloud, with notable milestones in Vault CRM. New innovations like the MLR Bot have generated significant excitement and are expected to contribute to revenue growth. Additionally, the company has progressed in several large strategic partnerships within the Development Cloud, further enhancing its growth trajectory. A strong Q4 billings outlook, supported by a diversified product base, underscores Veeva’s resilience and potential.
However, challenges remain. Migrating from Veeva CRM to Vault CRM is resource-intensive for large organizations, creating potential friction. Regulatory changes under a new administration could impact Veeva’s business model, introducing uncertainty. Competition from Salesforce, particularly in larger customer accounts, poses a strategic challenge. Meanwhile, the impact of generative AI applications on gross margins is unclear, though it is not expected to disrupt long-term profitability. Additionally, the CRO market, a contributor to Veeva’s revenue, is experiencing headwinds that could affect growth.
Despite these hurdles, Veeva’s broad product adoption, strategic innovation, and promising partnerships make it a compelling growth story. With a recalibrated valuation, according to the base case scenario, an intrinsic value of $273.24, the current stock price offers an attractive entry point for long-term investors. In a best-case scenario, continued innovation and strategic execution could significantly elevate the company’s market position and valuation to $321.46.
Veeva Systems Inc. (VEEV) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 48 hedge fund portfolios held VEEV at the end of the third quarter which was 50 in the previous quarter. While we acknowledge the risk and potential of VEEV as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than VEEV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
