Why Veeva Systems Inc's Shares Are Zooming Higher

This highly shorted stock surprised Wall Street in a good way.

Aug 29, 2014 at 11:04AM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shareholders of Veeva Systems (NYSE:VEEV), a cloud company focused on helping drug companies streamline the sales and regulatory processes, saw their stock climb as much as 17% today.

So What: Veeva reported earnings and revenue that came in above expectations, and raised guidance for the full year.

Specifically, Veeva saw revenue climb 53% as non-GAAP income shot 69% higher. Much of that jump was due to the fact the company continued to show strength in its Veeva CRM solutions -- which help integrate medical sales information under one umbrella.

Veeva's other line of business -- Veeva Vault -- focuses on helping life sciences companies streamline clinical trials and the regulatory process. The company added 10 new customers for its signature eTMF service, with one of them being its second top 10 pharma company.

For the rest of the year, the company raised both its earnings and revenue outlooks. Veeva now expects non-GAAP EPS of $0.31 -- up 15% from previous projections -- on revenue of $302 million -- up 8% from its previous forecast.

Now What: Veeva is a newly IPO'd company this year, and it has had a volatile run on the public markets. And given the large number of shares sold short previous to today, some of the stock's movement could be due to a short squeeze.

With shares now trading hands for 100 times trailing earnings, there are high expectations built into the stock. That shouldn't necessarily stop you from buying shares -- I own them myself. If Veeva is able to capture Big Pharma customers with its incredibly sticky product, it could be dominant for decades to come.

But investors need to understand that if the company falls short of these expectations, huge downswings in the stock price will follow. That's why my personal stake is less than 1% of my portfolio right now. I'd suggest a similarly cautious approach.

Leaked: This coming blockbuster will make even Veeva jealous
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Brian Stoffel owns shares of Veeva Systems. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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