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Veeva Successfully Leveraging Dominant Position in CRM Says Goldman in New Bullish Recommendation


Veeva (VEEV) Successfully Leveraging Dominant Position in CRM Says Goldman in New Bullish Recommendation

By Sam Boughedda

Goldman Sachs analyst Gabriela Borges initiated Veeva Systems (NYSE:VEEV) with a Buy rating and a price target of $253, representing a potential 35% upside.

In a note to clients, Borges said Goldman Sachs views Veeva as a long-term compounder because of its competitive moat and exposure to technology adoption in Life Sciences.

“We believe the company is successfully leveraging its dominant position in CRM to cross-sell CRM add-ons and finance its efforts to expand into software for R&D use cases, where we expect to see increasing momentum over the next 2 years,” commented Borges. “While we recognize the risk of seat count in CRM going down due to pharma companies reducing their salesforces, our bottom-up analysis suggests that the biggest impact is likely already in Veeva’s model and priced in to the stock (Veeva has underperformed vertical peers by ~16% since it announced this dynamic and 2022 sales estimates were flat vs. positive revisions for peers).”

The analyst pointed to medium-term drivers of the stock as being commercial products Crossix and Data Cloud in the Commercial segment and the clinical data management suite product cycle in the R&D segment.

“We view Veeva’s financial model as particularly resilient in the current macro environment. Our bottom-up analysis of sales and marketing spend at pharma companies suggests limited year to year volatility; and while R&D trends are more negative, Veeva has low penetration today and can benefit from secular growth. Coupled with the stock trading at 28x 2023 FCF (vs. vertical peers at 36x) despite a better Rule of 40 profile (~55 vs. peers at ~35), we see compelling risk/reward.”

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