Why Veeva Systems (VEEV) Stock Is Trading Up Today
What Happened:
Shares of healthcare software provider Veeva Systems (NASDAQ:VEEV) jumped 9.1% in the morning session after the company reported second-quarter earnings results. Revenue and operating profit beat expectations. Additionally, its gross margin improved compared to the same quarter last year. Finally, the company raised its full year revenue guidance, showing that topline momentum is strong. On the other hand, its revenue guidance for next quarter underwhelmed. While it wasn't a perfect quarter, it was a pretty solid one.
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What is the market telling us:
Veeva Systems’s shares are quite volatile and over the last year have had 5 moves greater than 5%. In context of that, today’s move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 10 months ago, when the stock dropped 7.3% on the news that the company revised its financial projections downward. Management cited a challenging macro environment, lower-than-expected services revenue, and the Inflation Reduction Act as reasons for the revised guidance. As a result, the company lowered its fiscal year 2024 revenue guidance by about $15 million. It now expected Q3’24 revenue at $616M from $614M–$616M. Full-year fiscal year 2024 guidance for subscription revenue and non-GAAP operating income are expected to be in line to slightly above the prior guidance. For fiscal year 2025, Veeva is shaving off $50m from its top-line revenue projection and expects at least 2.75B in revenue, down from at least $2.8B.
On a more positive note, Veeva said it remains on track to meet its long-term goal of $3 billion revenue run-rate, about one year ahead of the target. Overall, the revised outlook is not a good sign and could make it tough for investors to stay positive.
Veeva Systems is up 14.7% since the beginning of the year, and at $217.07 per share it is trading close to its 52-week high of $234.79 from March 2024. Investors who bought $1,000 worth of Veeva Systems’s shares 5 years ago would now be looking at an investment worth $1,287.
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