Veeva Systems Delivers In Q2, So Why Did Shares Drop?

Reviewing the results, JMP Securities maintains its Outperform rating on the shares of the company, with a $70 price target.

Analysts Rishi Jaluria and Greg McDowell noted that Veeva's second-quarter revenues rose 27 percent year-over-year to $166.6 million, exceeding the consensus estimate of $164.2 million and that non-GAAP earnings per share of $0.23 were 3 cents above the Street estimates.

Incidentally, the company's second-quarter and full-year guidance were also above estimates, the analysts added.

Why would then the stock fall?

JMP Securities believes the souring of the market sentiment was due to the third-quarter guidance coming in below investor expectations.

However, the firm sees the above-consensus results on all metrics, signing of the first two customers by Vault EDC, solid momentum in Vault Clinical and Quality and the strong momentum in Vault OLS as the positives out of the quarterly results.

"Overall, we feel more positive on Veeva following the quarter and we would use the pullback as a buying opportunity," the firm said.

The firm said it continued to like Veeva due to the following reasons:

• Continued outperformance of Vault, which extends Veeva's long runway of growth.
• Limited competitive threat, given the company's domain expertise and established relationships with top pharma companies have created a sustainable moat around the business.
• Multiple growth drivers, positioning the company for sustained, long-term growth.

Accordingly, JMP Securities raised its 2018 non-GAAP earnings per share estimate from 83 cents to 85 cents and 2019 estimate from $1 to $1.01, while introducing its 2020 non-GAAP estimate of $1.23, all above the corresponding consensus estimates.