- Needham analyst Scott Berg sees July quarter earnings continue this week with three reports: Barnes & Noble Education, Inc BNED (reiterated Buy; price target $4), Smartsheet Inc SMAR (maintained Buy; price target $57), and Veeva Systems Inc VEEV (reaffirmed Buy; price target $205).
- Last week's first July quarter earnings were similar to June reports in his stock universe. The looming macro backdrop has had little to no impact on North American sales but has contributed to European sales cycles lengthening.
- Software sentiment was generally positive this past week, except for Friday's Fed announcement that drove growth stocks lower.
- The IGV finished down 5.0% for the week versus the NASDAQ (-4.4%) and the S&P 500 (-4.0%).
- He was most positive on SMAR and VEEV this week.
- For SMAR, he believes demand in the collaborative work management (CWM) space remains strong and expects the company's sales execution to return to normal, highly productive levels in 2Q, which should drive a 3pt beat on billings growth from his current 35% estimate.
- For VEEV, his recent industry checks indicate that while budgets will be static in CY23, Veeva will gain wallet share with its existing base as savings from rep count reductions go to digital marketing channels and data.
- Channel checks suggest VEEV is the best positioned to benefit from the digitization of sales and marketing budgets, he noted.
- Price Action: SMAR shares traded lower by 1.41% at $33.49 on the last check Monday.
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