One of the clear lessons emerging from the pandemic-induced bear market is that not all companies are created equal. While the S&P 500 has struggled to get back to break-even since its late February plunge, some stocks have held up much better during the downturn.

One company that has defied the odds is Veeva Systems (NYSE:VEEV). The customer-relationship management (CRM) software and cloud solutions specialist has significantly outperformed many of its peers, and its stock has climbed even in the face of these historic headwinds.

This raises a question among a growing number of investors: In the face of continued economic and market uncertainty, should investors consider adding Veeva Systems stock to their portfolios right now? Or has the train already left the station?

A medical practioner using a tablet with swirling medical technology icons.

Image source: Getty Images.

An indispensable drug development tool

What sets Veeva Systems apart is its unique business model. It helps companies in the life sciences industry manage customer relationships, but that's just the beginning. The software-as-a-service (SaaS) provider offers a cloud-based suite of tools and software that helps with everything from managing the initiation of clinical trials to submitting the results for publication and peer review, and even compiling the results and facilitating the transmission of those results in the proper format to regulators for ultimate approval.

Most importantly, however, the company is able to do all this while protecting patient privacy so that it doesn't rule afoul of healthcare regulations. Veeva also continues to innovate, adding applications, cross-selling new products to existing clients, and making it much less likely that customers will ever leave the platform.

A by-product of the pandemic has been a broad and overarching shift to digital systems, which are right in Veeva Systems' wheelhouse. During the pandemic the company has been providing its remote meeting software to clients free of charge. Veeva also introduced new capabilities that allow study monitors to review and verify source documents remotely, allowing clinical trials to continue without some of the usual face-to-face meetings. It also added tools that helped pharmacy reps request drug samples for physicians remotely. Finally, Veeva's Crossix data platform provided valuable insights into changing patient behavior and the increasing adoption of telehealth

Impressive quarterly results

While it certainly didn't hurt that Veeva Systems operates in a space with significant tailwinds, that isn't the only thing driving its stock price higher. The company reported first-quarter revenue that grew 38% year over year, while its recurring subscriptions services revenue climbed 36%. Both metrics marked notable accelerations from the prior full-year results, which grew 28% and 29%, respectively. At the same time, non-GAAP or adjusted earnings per share (EPS) increased 32%. Both revenue and EPS easily surpassed analysts' consensus estimates. 

It isn't just the financial metrics that made investors increasingly optimistic. The company announced that the Veeva Development Cloud continues to gain traction, adding three additional top-20 pharmaceutical companies during the quarter, bringing its total customer base to 570. Its latest offering, the Veeva Data Cloud, just went live in March, and the company has already signed two "early adopters" for pilot programs, including an emerging biotech and a top-20 pharmaceutical customer.

Cloud computing icons over a blurred background.

Image source: Getty Images.

Other important considerations

In this time of economic uncertainty, it's worth pointing out that Veeva Systems has a rock-solid balance sheet, with $1.38 billion in cash and investments -- and no debt. 

It's also important to note that founder and CEO Peter Gassner still owns more than 89% of the company's Class B shares (not a typo) and nearly 52% of the total voting power, so his interests are unequivocally aligned with those of investors. 

Valuation

It's worth noting that the stock is by no means cheap. As of Tuesday's market close, the stock trades at 25 times forward sales -- a ratio of between 1 and 2 is considered good -- so investors have clearly baked an impressive amount of growth into Veeva's current share price. 

To put that into perspective, analysts are forecasting sales growth of 26% in the current quarter, 32% for the current year, and 25% next year -- though Veeva has a history of exceeding expectations. 

The bottom line

But the most important investing question is "Is Veeva stock a buy right now?" I would argue the answer is "yes."

The company has a large and growing market opportunity that expands with the introduction of each new product or service. It also has a significant moat, due to the complexity added by privacy regulations and the requirements imposed by government regulators. And while there is some competition for a number of Veeva's individual products and services, it simply doesn't have any direct competitor that can meet all the needs of its customers in the life sciences arena.

That said, if you prefer to avoid stocks with high valuations, then Veeva Systems probably isn't the right stock for you.

If, on the other hand, you're willing accept a high valuation for the chance at continuing and extraordinary gains -- and assuming you have an appropriate investing time horizon --then you should probably consider adding Veeva Systems to your portfolio.