Why Veeva Has More to Run
I am going to revisit a call I made last October 2019 on a tech stock that has outperformed mightily this year, and for good reasons.
There isn’t a tech stock more relevant today than Veeva Systems (VEEVA) because of the wave of health spending transcending the world.
Find me a country that is spending less on healthcare today!
I recommended this stock last October and the shares keep climbing over itself to reach all-time highs over and over again.
The one-sentence answer to why buy this stock is that Veeva’s latest earnings showed quarterly total revenue growing 37.7% year-over-year and EPS surging 32% year-over-year.
If I stopped here, that would most likely be enough to convince readers about this spectacular company.
Read on to understand more about this health cloud upstart positioned at the intersection of healthcare and cloud technology.
Veeva provides cloud-based CRM, data storage, and analytics services for life science and pharmaceutical companies.
It was co-founded by the former senior VP of technology at Salesforce, and its services are seamlessly integrated into Salesforce’s platforms.
Veeva’s tools help companies keep track of customer relationships, clinical trials, government regulations, prescribing habits, and other data in real-time.
I guess you could call it the Salesforce of cloud healthcare.
It enjoys a first-mover’s advantage in the space and services an all-star lineup of top pharmaceutical companies like GSK and Novartis.
The first-mover advantage is critical because Microsoft announced a copycat version of Veeva’s services just a month ago.
To read about Microsoft heading into the health cloud business, click here.
Demand for Veeva’s services has surged over the past few years, thanks to vicious competition between drugmakers and the need for real-time data.
The health crisis will also generate tailwinds for Veeva as leading drugmakers scramble to develop treatments and vaccines.
The company hasn’t been quiet, rolling out new products this year.
In May 2020, the company announced MyVeeva for clinical trials.
It is software built to enable clinical research sites to interact remotely with their patients easing the burden on in-clinic visits.
In March 2020, the company commercially launched Veeva Data Cloud, a robust technology platform constructed for the development and delivery of large-scale patient data and analytics.
The coronavirus is the catalyst that is forcing our healthcare industry to digitize rapidly and modernize.
The data backs up this trend.
The healthcare IT Market is forecasted to be valued at $511.06 Billion by 2027, growing at a CAGR of 13.8%.
To read more about this trend, click here.
Veeva analytics showed us that monthly doctor visits were halved in February compared to April before the widespread lockdown.
Teleconference doctor calls have skyrocketed increasing 30% year-over-year in April, compared with less than 1% in February.
Remote meetings between pharmaceutical companies and doctors increased more than 30 times and email communications doubled from February to April.
Veeva’s management wholeheartedly believes it will reach its goal of generating $3 billion in revenue by 2025.
Their goals are impressive with an expectation of year-over-year growth rate of 26% at the midpoint.
Veeva loves to overdeliver, and if one thing is clear from the Q1 scorecard, health cloud computing services are more critical than ever to the life sciences and healthcare industries.
The company also has a pristine balance sheet with $1.38 billion in cash and short-term investments (nearly three years of cash operating expenses at the Q1 run rate) and zero debt.
Moving forward, I firmly believe that Veeva Systems will fetch a growing premium to the overall market.
The stock has zoomed from the March lows of $133 and is now trading at a robust $223 and the path of least resistance is up.
