Veeva (VEEV) Down 5.4% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Veeva Systems (VEEV). Shares have lost about 5.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Veeva due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Veeva Systems Q2 Earnings Beat Estimates, FY20 View Raised

Veeva Systems reported second-quarter fiscal 2020 EPS of 55 cents, well ahead of the Zacks Consensus Estimate of 49 cents. The metric shot up 41% on a year-over-year basis.

The company’s revenues totaled $266.9 million, outpacing the Zacks Consensus Estimate of $259.3 million. On a year-over-year basis, the top line improved 27.3%.

Segmental Details

Subscription Service

Second-quarter subscription service revenues summed $217.3 million, up 28.1% year over year. Per management, the solid momentum in bookings was maintained in the quarter.

Professional Service and Others

Professional Service revenues rose almost 23.9% to $49.6 million from the figure registered in the year-ago quarter.

Per management, outperformance by Veeva Commercial Cloud and Veeva Vault drove revenues across all segments.

Margin Details

In the reported quarter, adjusted gross profit increased 31.2% year over year to $202.4 million. Adjusted gross margin was 75.9%, which expanded 230 basis points (bps).

Adjusted operating income totaled $103.7 million, up 39.4% year over year. In the quarter under review, adjusted operating margin improved 330 bps to 38.8%.

Meanwhile, operating expenses totaled $122.8 million, up 25.9% year over year.

Guidance

For the fiscal third quarter, Veeva expects revenues between $274 million and $275 million.

Adjusted EPS is anticipated within 54-55 cents. Adjusted operating margin is projected between $103 million and $104 million.

For fiscal 2020, Veeva has raised its revenue guidance.

Notably, the company projects revenues within $1,062 million and $1,065 million, compared with the earlier communicated range of $1,045-$1,050 million.

Adjusted EPS is anticipated within $2.11 and $2.13. Adjusted operating margin is projected between $401 million and $404 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

At this time, Veeva has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Veeva has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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