What happened
Shares of Veeva Systems (VEEV +0.15%) gained 57.5% last year, according to data provided by S&P Global Market Intelligence.
The cloud solutions provider has been a solid growth play in the life sciences industry. It continued to impress investors with robust growth across its business segments last year, particularly with Veeva Commercial Cloud and Veeva Vault.
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So what
More organizations are moving their data systems over to the cloud, which is fueling Veeva's growth. Revenue increased by 26% year over year through the first three quarters of 2019.
During the year, Veeva Vault reached 50% of the company's total revenue. This business has bright prospects serving needs in clinical and drug development with Veeva Vault Clinical and Veeva Development Cloud.
Additionally, the company just closed two acquisitions with Crossix and Physicians World. These additions will expand Veeva's capabilities in data analytics and events management software services for healthcare professionals.
Now what
Management sees a long runway of growth. Current projections call for Veeva to hit $3 billion in revenue by calendar 2025, which is nearly three times trailing-12-month sales. The stock cooled off to close the year, which likely has to do with valuation concerns rather than business performance. At 72 times trailing earnings, the shares currently fetch an expensive price, even by Veeva's standards.
Earnings are expected to be up 33% year over year once Veeva reports fourth-quarter results for 2019. Looking to next year, analysts expect earnings growth to decelerate into the teens. All said, near-term upside for the stock may be limited if those expectations play out, given the already high valuation on the shares.
