On Friday, Barclays (LON:BARC) maintained its Overweight rating on Veeva Systems (NYSE:NYSE:VEEV) and increased the stock's price target to $275 from $260. The adjustment follows Veeva Systems' third-quarter performance, which Barclays found to be commendable for several reasons. The stock is currently trading near its 52-week high of $240.68, with InvestingPro data showing an impressive overall financial health score of "GREAT."
The firm observed that Veeva's normalized billings exceeded expectations by approximately $20 million, demonstrating a year-over-year growth of 12%. This consistent performance aligns with the previous quarter's results and suggests a stable economic environment. Additionally, Veeva Systems reported margins exceeding 43%, attributed partly to the timing of expenses and also to the company's operational leverage. According to InvestingPro data, the company maintains a robust gross profit margin of 73.35% and has achieved revenue growth of 15.29% over the last twelve months.
Barclays also noted that the positive results from the third quarter are expected to carry into the full-year 2025 billings, leaving the fourth-quarter billings forecast strong and unchanged. This is seen as a positive indicator, especially as it comes with the anticipation of more contracts for Veeva's Clinical Data Management System (CDMS). While there is an expectation for a quarter-over-quarter dip in margins due to the timing of expenses, margins are still projected to increase from previous estimates.
Another highlight from Veeva Systems' recent performance is the increased focus on innovation within their Vault Customer Relationship Management (CRM) services. This innovation is driving migration among top pharmaceutical companies, with four of the top 20 firms transitioning to Veeva's platform. Barclays believes this trend will likely encourage further adoption.
Looking ahead, Barclays models around 12% growth in billings and revenue for Veeva Systems over the next couple of years. This estimate is slightly below the company's long-term framework but serves as a starting point for expectations.
The revised price target of $275 reflects Barclays' confidence in Veeva Systems' continuing growth and market position. Based on InvestingPro analysis, the stock is currently trading near its Fair Value, with 13 additional ProTips available to subscribers through the comprehensive Pro Research Report.
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