Veeva Systems Inc. VEEV is well-poised for growth in the coming quarters, courtesy of its strong product portfolio. The optimism, led by a solid third-quarter fiscal 2025 performance and strategic deals, is expected to contribute further. Stiff competition and rising operational costs persist.
This Zacks Rank #3 (Hold) company’s shares have risen 16.7% in the year-to-date period compared with 40.2% growth of the industry. The S&P 500 Composite has risen 27.7% during the said time frame.
The renowned provider of cloud-based software applications and data solutions for the life sciences industry has a market capitalization of $37.14 billion. The company projects 26.2% growth for the next five years and expects to maintain its strong performance in the future. It delivered a trailing four-quarter average earnings surprise of 6.92%.
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Strong Q3 Results: Veeva Systems exited the third quarter of fiscal 2025 with better-than-expected results. The uptick in the overall top line and bottom line and robust performance by the Subscription services segment during the quarter were impressive. Per management, more than 30 customers are now live on Vault CRM, and the seven migrations from Veeva CRM to Vault CRM are on track for completion by year-end.
In the fiscal third quarter, Veeva Systems’ gross profit improved 16.9% year over year to $524.8 million. The gross margin expanded 230 basis points (bps) to 75.1%. The operating margin in the fiscal third quarter expanded by a huge 510 bps to 25.9%.
Robust Product Portfolio: We are optimistic about Veeva Systems’ unique solutions, which include Veeva Vault, Veeva CRM (customer relationship management), Veeva Network and Veeva OpenData.
Veeva Systems continues to expand its product portfolio with new launches. In December, the company announced the latest release of Vault CRM Suite. Vault CRM Campaign Manager is also now available as part of Vault CRM Suite, which is likely to help companies realize the vision of connected sales, marketing, and medical for streamlined, customer-centric engagement.
In November, Veeva Systems unveiled Vault CRM Bot and Vault CRM Voice Control, the two new Generative Artificial Intelligence capabilities in Vault CRM, likely to be introduced next year. In August, the company reached a significant milestone on its path to connect sales, marketing, medical records and services to enable true customer centricity with the release of Vault CRM Service Center.
Veeva Systems also added 13 new Vault CRM customers in the fiscal third quarter. In September, VEEV commented on the release of Veeva Site Connect, which is part of the Veeva Clinical Platform. Veeva Site Connect plays a critical role as the industry simplifies and standardizes site collaboration, and seven of the top 20 biopharma companies have already adopted it to streamline trials.
Strategic Deals: We are upbeat about Veeva Systems’ recent few collaborations. In November, VEEV announced that Boehringer Ingelheim is set to commit to moving to Veeva Vault CRM. Boehringer Ingelheim seeks to expand on its existing Veeva Commercial Cloud solutions and One Medicine and Amplify platforms, which connect development processes and data on Veeva Development Cloud. In October, Veeva Systems and Walgreens Boots Alliance announced a long-term strategic partnership to help life sciences companies improve patient outcomes. Through this collaboration, Walgreens will likely use Veeva Systems’ Data Cloud and Clinical Platform to connect its extensive network of community locations with diverse patient populations, aiming to simplify access to clinical research.
In June, the company announced a partnership with Vita Global Sciences that is likely to help the latter improve its clinical data management processes and collaborations with key trial stakeholders. The latest adoption of Veeva Vault electronic data capture, part of the Veeva Clinical Platform, is likely to boost the Veeva Development Cloud business.
Stiff Competition: Veeva Systems operates in a highly competitive market. In new sales cycles within the company’s largest product categories, it competes with other cloud-based solutions from providers, such as IQVIA Inc., that make applications geared toward the life sciences industry. VEEV’s Commercial Cloud and Veeva Vault application suites also compete to replace client server-based legacy solutions offered by companies like Oracle, Microsoft Corporation and other smaller application providers.
Rising Costs: Veeva Systems has been experiencing rising operating costs over the past few months. Sales and marketing expenses for the third quarter of fiscal 2025 increased 1.9% year over year. Management expects sales and marketing expenses to increase in fiscal 2025, primarily due to employee-related expenses as the company raises its headcount to support its sales and marketing efforts associated with its product offerings and continued expansion of its sales capacity across all its solutions. In the fiscal third quarter, the total operating expenses increased 7.2% year over year. Veeva Systems expects operating expenses to increase in fiscal 2025, primarily due to employee compensation-related costs.
Veeva Systems is witnessing a positive estimate revision trend for fiscal 2025. In the past 60 days, the Zacks Consensus Estimate for earnings per share (EPS) has moved 18 cents north to $6.41.
The Zacks Consensus Estimate for fourth-quarter fiscal 2025 revenues is pegged at $698.1 million, indicating an 10.7% improvement from the year-ago quarter’s reported number. EPS estimate is pinned at $1.57, implying 13.8% improvement year over year.
Some better-ranked stocks in the broader medical space are Masimo MASI, Accuray ARAY and AxoGen AXGN.
Masimo, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 11.8% for 2025. You can see the complete list of today’s Zacks #1 Rank stocks here.
MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%. Its shares have risen 49.4% compared with the industry’s 6.7% growth year to date.
Accuray, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 1200% for 2025. Its earnings missed estimates in three of the trailing four quarters and met in one, delivering an average negative surprise of 141.97%.
ARAY’s shares have lost 32.2% against the industry’s 6.7% growth year to date.
AxoGen, carrying a Zacks Rank of 2 at present, has an estimated earnings growth rate of 252% for 2025. It delivered a trailing four-quarter average earnings surprise of 91.11%.
AXGN’s shares have risen 111% year to date compared with the industry’s 6.7% growth.
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