Please ensure Javascript is enabled for purposes of website accessibility

Up 55% in 2020, Is Veeva Systems Stock Still a Buy?

By Nicholas Rossolillo – Jun 3, 2020 at 6:31AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Cloud computing for life sciences during pandemic is more important than ever.

Blink and you would have missed Veeva Systems' (VEEV 1.11%) coronavirus slump. The stock is up 55% 2020 to date, driven by continued migration to its cloud-based software for pharmaceutical and biotech companies. The battle to develop treatments for infectious disease and other illnesses is benefiting greatly from the data management tools Veeva provides, and the company got a massive boost during its fiscal 2021 first quarter (the three months ended April 30, 2020). 

After the stellar run this year -- which caps a 655% return over the last trailing five years -- Veeva Systems stock unsurprisingly carries quite a premium. Going all in now on this stock may not be perfect timing, but for those looking far enough down the road it's hard to imagine being unhappy with this one.

A doctor off-screen holding up a stethoscope to an illustrated icon of a person

Image source: Getty Images.

Helping life sciences fight pandemic

Crisis often breeds innovation, and on that front Veeva had a busy Q1. Powered by its Crossix acquisition from last year, Veeva announced that its Data Cloud offering for the management of patient and prescriber information would be available by December 2020. MyVeeva, the company's first patient-facing application for managing clinical trials, will also be made available by the end of the year. And while Veeva's early progress in growing outside of life sciences has taken a hit (most notably among cosmetic companies), demand for basic consumer goods has gotten a bump due to the pandemic. Veeva said it signed on a top 10 consumer products company to its quality management software offering.  

All in all, the healthcare industry is rapidly moving to digital systems because of coronavirus. Again using data from Crossix, Veeva said its monthly doctor visits were halved in February compared to April, before the widespread lockdown. And while in-person visits have been restricted, teleconference doctor visits increased to 30% of the total in April, compared with less than 1% in February. According to Veeva customer relationship management, remote meetings between pharmaceutical companies and doctors increased more than 30 times and email communications doubled from February to April.  

The result was an acceleration in Veeva's trajectory. After the company notched 28% revenue growth last year, its fiscal 2021 got off on even stronger footing.


Q1 2021

Q1 2020



$337 million

$245 million


Adjusted net income

$105 million

$78.7 million


Free cash flow

$282 million

$235 million


Data source: Veeva Systems.  

A world post-coronavirus will need Veeva

Veeva's management reiterated its view that it will be able to reach its goal of generating $3 billion in revenue by 2025. That's significant, given the company sees revenue for the current fiscal year coming in between $1.38 billion and $1.395 billion -- good for a year-over-year growth rate of 26% at the midpoint. That includes $90 million to $95 million from the Crossix and Physicians World takeovers. Adjusted operating profit margin is also expected to be over 36% with full-year earnings per share of $2.50 to $2.55, up 15%.

But Veeva tends to underpromise and overdeliver, and if one thing is clear from the Q1 scorecard, cloud computing services are more important than ever to the life sciences and healthcare industries. And disruption or not, Veeva has a superb 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. Thus, long-term guidance of $3 billion in revenue looks realistic. Shares do go for a premium 72.4 times trailing one-year free cash flow (revenue less cash operating and capital expenses) and 88 times full-year expected adjusted earnings; but Veeva is all about growth right now, and there is going to be ample opportunity for expansion in a world post-coronavirus.

While shares carry a high price tag, this is one of the best stocks to bet on biotech, pharmaceuticals, and healthcare for investors in it for the long run.

Nicholas Rossolillo and his clients own shares of Veeva Systems. The Motley Fool owns shares of and recommends Veeva Systems. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Veeva Systems Inc. Stock Quote
Veeva Systems Inc.
$166.71 (1.11%) $1.83

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.