What happened
Shares of Veeva Systems (VEEV -0.58%) were sinking 16.9% as of 10:53 a.m. ET on Thursday. The decline came after the company announced its 2021 fourth-quarter and full-year results following the market close on Wednesday.
Veeva reported Q4 revenue of $485.5 million, up 22% year over year. It posted adjusted earnings per share of $0.90, a 15% increase. Both top- and bottom-line results topped consensus Wall Street estimates.
So why did the life sciences stock tumble? Veeva provided a disappointing outlook for the first quarter. The company projects Q1 revenue will be between $494 million and $496 million. The average analysts' estimate looked for Q1 revenue of $526 million. Veeva forecast adjusted earnings per share of between $0.91 and $0.92 in the first quarter. This fell well short of the consensus estimate of $0.98.
So what
Today's sell-off appears to be a classic case of missing the forest for the trees. Sure, Veeva won't deliver the numbers that Wall Street expects over the near term. However, the company's long-term prospects appear to remain exceptionally strong.
Veeva CEO Peter Gassner explained in the company's Q4 conference call what is going on. He noted that Veeva faces some challenges with hiring in the tight labor market. Gassner also mentioned that some deals are taking longer to close.
But he also stated that Veeva just "had a great hiring quarter." As for the deals requiring more time to close, that's because they're larger in size than in the past.
Image source: Getty Images.
Now what
Veeva continues to track ahead of its growth targets that extend through 2025. Gassner said, "Our innovation engine is strong. And we're executing well in established areas and newer areas. This sets Veeva up for a long runway of organic growth and profitability as we deliver more value to the industry."
There's no reason to believe otherwise at this point. Investors should take a long-term view with Veeva rather than focusing too much on what analysts expect in one quarter.
