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Why Veeva Systems Stock Fell 16.1% in October

By Beth McKenna – Updated Nov 12, 2018 at 7:33AM

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Shares of the life sciences industry-focused cloud solutions provider had a tough month last month. Here's what investors should know.

What happened

Shares of Veeva Systems (VEEV 2.61%) declined 16.1% in October, according to data from S&P Global Market Intelligence. They're up 2.5% in November through Friday, and have gained 69.3% so far in 2018. 

Veeva provides cloud-based software solutions primarily for the life sciences industry.

For context, the S&P 500 fell 6.8% last month, has returned 2.7% this month, and has returned 5.4% so far this year, through Friday.

A lab worker's hands holding a beaker with some liquid in it that's sitting on a table along with other beakers and test tubes.

Image source: Getty Images.

So what

Veeva Systems didn't release any negative news last month, but it did receive some negative press: Wall Street firm Cannacord Genuity downgraded the stock from a buy to a hold rating on Oct. 1. Shares fell 3.4% that day, while the overall market was up slightly.

We can largely attribute Veeva Systems stock's subpar performance in October, however, to the general tough market conditions. The S&P 500 fell 6.8% and the tech-heavy Nasdaq dropped 9.2% in the month, with many highly valued, high-flying tech stocks suffering greater losses. The likely catalysts for investors dumping stocks were escalating U.S.-China tariffs and rising U.S. interest rates.

Now what

Investors should be getting some material news soon, as Veeva is scheduled to report its fiscal third-quarter 2019 earnings, for the period ended Oct. 31, after the market close on Wednesday, Nov. 28. For the quarter, management provided the following guidance: revenue of $215 million to $216 million, which, at the midpoint, translates to growth of 22% year over year; and adjusted earnings per share (EPS) of $0.38, which translates to growth of 52%. 

Veeva Systems stock is worth putting on your watchlist if you don't already own it. The company is growing at a fast clip and still has plenty of growth opportunities within its core life sciences market and in other markets into which it's been expanding, such as cosmetics. Shares aren't cheap -- they're trading at 54.4 times projected forward earnings -- but that's usually par for the course for companies with potentially huge total addressable market sizes.

Beth McKenna has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Veeva Systems. The Motley Fool has a disclosure policy.

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