What happened
Veeva Systems (VEEV -1.33%) will be happy once this week is over. As of Thursday evening the company's shares were down by nearly 15% week to date, according to data compiled by S&P Global Market Intelligence. A weaker-than-expected earnings report and subsequent analyst downgrades were the culprits in the decline.
So what
Veeva posted encouraging growth on both the top (22% higher on a year-over-year basis) and bottom lines (15%, in terms of non-GAAP, or adjusted, per share net profit) for its fourth quarter of 2021. Both line items also beat the average analyst estimates.
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But as we all know by now, stocks trade on their potential, not their past, and that was the issue with Veeva.
The company proffered guidance for both its first quarter of 2022 and the entirety of the year. In contrast to the trailing quarter, Veeva's forecast for both revenue and profitability were under the collective prognosticator expectations (although it must be said that the full-year guidance slightly topped analyst estimates).
Now what
Investors were obviously concerned with that lackluster quarterly guidance from Veeva. Analysts were, too; a group of them trimmed their price targets on the stock, with one changing his recommendation.
The recommendation change came from Bank of America's Brad Sills, who downshifted his tag on the stock to neutral from buy. He also cut his price target to $220 per share from the previous $300. Sills is concerned that the company's growth rates and margins may have hit a peak.
Another price slice came from Needham & Company prognosticator Ryan MacDonald. He also chopped his price target -- it's now $270, down some distance from the former $327.
Yet in maintaining his buy recommendation on the shares, he remains optimistic on Veeva's future. He said that "While shares are likely to trade off a bit given the below-consensus topline guide for [the first quarter], management noted that the emergence of larger [research and development] deals in the pipeline have resulted in [full-year 2023] being more heavily weighted to the second half."
