Veeva Shares Remain In A Permanent State Of 'Expensiveness'

Canaccord Genuity maintained its Buy rating on Veeva Systems Inc VEEV following the company’s third quarter beat and solid guidance.

• Veeva Reports Q3 GAAP EPS $0.15, Adj. EPS $0.22 vs $0.16 Est., Revenues $142.8M vs $135.67M Est
• Veeva Sees Q4 Adj. EPS $0.17 vs $0.15 Est., Sales $145M-$146M vs $140.4M Est.
• Veeva Sees FY17 Adj. EPS $0.68 vs $0.63 Est., Sales $538.9M-$539.9M vs $526.8M Est.

Commenting on the initial panic reaction, the brokerage said it didn't get any panic from “a well telegraphed, temporary deceleration in some metrics.”

“[A] calendar 2016 (billings) figure of 28% plus our fundamental checks independent of what management tells us implies that growth in revenues and operating income could be 200-500 basis points faster than the roughly 20% growth that is management’s guidance,” analyst Richard Davis wrote in a note.

Davis believes that preliminary F2018 revenue guidance for roughly 20 percent feels overly conservative as the company is expected to exit F2017 with billings growth of 28 percent.

On the valuation front, Davis believes Veeva shares are “OK” at the current levels and views any exogenous weakness as a buying opportunity. Davis raised his price target by $2 to $48.

“[T]here are simply too many “fans” who are dying to buy this stock the moment the shares dip, and that this dynamic puts the stock in a more or less permanent state of “expensiveness”, especially based on what will likely be conservative consensus estimates,” Davis highlighted.

At last check, shares of Veeva rose 8.85 percent to $45.24. They touched a new 52-week high of $45.55.