Earnings Week Ahead: Salesforce, Five Below, Dollar General and Cooper Companies in Focus

Earnings Calendar For The Week Of November 29

Monday (November 29)

Ticker Company EPS Forecast
ADOOY Adaro Energy ADR $0.22
GRFS Grifolsbarcelona $0.29
JOBS 51job $4.45
LI Li Auto -$0.10
JKS JinkoSolar Holding Co. Ltd. ADR -$0.07
TCOM Trip.com Group Ltd $0.11
THO Thor Industries $2.70
KFY Korn Ferry International $1.37

 

Tuesday (November 30)

IN THE SPOTLIGHT: SALESFORCE

The San Francisco, California-based software company Salesforce is expected to report its third-quarter 2022 earnings of $0.28 per share, which represents a year-over-year decline of over 80% from $1.74 per share seen in the same period a year ago.

“Our survey points to a strong qtr w/ 76% of partners who met/beat targets in 3Q, well above 55% in 2Q. In turn, 83% see forward qtr pipeline growth trending in-line or higher, the highest figure in 7 Qtrs. Our due diligence on gov’t was also strong w/ 3Q growth accelerating vs. 2Q. While FX could be a modest governor, we expect a solid beat & raise,” noted J. Derrick Wood, equity analyst at Cowen.

The leading provider of enterprise cloud computing solutions would post revenue growth of over 25% to $6.8 billion. In the last two quarters, the company has beaten earnings estimates at all times.

“Supporting evidence for management’s renewed commitment to drive both growth AND operating margin expansion is key to pushing the multiple higher. The potential for 30%+ FCF growth and multiple expansion makes Salesforce (CRM) our top pick in large-cap software,” noted Keith Weiss, equity analyst at Morgan Stanley.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE NOVEMBER 30

Ticker Company EPS Forecast
EZJ Easyjet £0.38
SHB Shaftesbury £3.15
BNS Scotiabank $1.51
PNN Pennon Group £23.48
CRM Salesforce.com $0.92
HPE Hewlett Packard $0.49
BOX BOX $0.21

 

Wednesday (December 1)

IN THE SPOTLIGHT: FIVE BELOW

The Philadelphia, Pennsylvania-based discount retailer Five Below is expected to report its fiscal third-quarter earnings of $0.29 per share, which represents a year-over-year decline of nearly 20% from $0.36 per share seen in the same period a year ago.

It is expected that this week’s results from the popular discount store retailer that sells products that cost up to $5 will also be good for investors watching the stock. Sales are expected to increase by over 15% to $562 million. Opening new stores and attracting new customers to existing locations will help the company achieve that growth.

FIVE’s profile among pure B&M retailers is nearly unmatched (high teens top/bottom-line growth, no debt). It’s driven by a differentiated, defensible model focused on extreme value merchandise across diverse categories. FIVE is exiting the COVID-19 pandemic as a fundamentally stronger and more relevant business, with best-in-class growth characteristics, various company-specific initiatives in place, and solid liquidity,“ noted Simeon Gutman, equity analyst at Morgan Stanley.

“Valuation is below historical average on unwarranted near-term supply chain/cost concerns, which are overblown in our view. White space store growth (>50% unit runway remaining) and multi-year track record of ~20% square footage growth with >90% productivity.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE DECEMBER 1

Ticker Company EPS Forecast
RY Royal Bank Of Canada $2.23
DCI Donaldson $0.55
IMAB I Mab -$0.24
PDCO Patterson Companies $0.50
SNOW Intrawest Resorts -$0.06
SNPS Synopsys $1.79
VEEV Veeva Systems $0.88
SPLK Splunk -$0.53
PVH PVH $2.07
SMTC Semtech $0.72
AI Arlington Asset Investment -$0.29
RAVN Raven Industries $0.20

 

Thursday (December 2)

IN THE SPOTLIGHT: DOLLAR GENERAL, COOPER COMPANIES

DOLLAR GENERAL: The largest discount retailer in the U.S. by the number of stores is expected to report earnings per share of $2.00 in the fiscal third quarter, which represents a year-over-year decline of over 13% from $2.31 per share seen in the same period a year ago.

However, the company’s revenue would also rise about 4% to $8.5 billion. In the last two years, the company has delivered an earnings surprise most of the time.

According to ZACKS Research, in fiscal 2021, Dollar General expects net sales to increase by 0.5% to 1.5% and same-store sales to decline by 2.5-3.5%. Earnings are now projected to be between $9.60 and $10.20 per share. According to the company’s earlier predictions, fiscal 2021 net sales will be down 1% to up 1% and same-store sales will decline by 3-5%. Earnings were earlier expected to range between $9.50 and $10.20 per share.

Dollar General (DG) is a best-in-class operator offering a rare combination of 1) consistent, high-quality top-and bottom-line results; 2) visible store growth; and 3) a shareholder-friendly capital allocation policy. Recent high-quality results add more confidence to the 10% L-T EPS growth algorithm, ramping top-line initiatives appear sustainable, and we see underappreciated margin upside from the rollout of Fresh self-distribution,” noted Simeon Gutman, equity analyst at Morgan Stanley.

COOPER COMPANIES: The global medical device company is expected to report earnings per share of $3.38 in the fiscal fourth quarter, which represents year-over-year growth of about 7% from $3.16 per share seen in the same period a year ago. The company’s revenue would climb nearly 10% to $748 million.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE DECEMBER 2

Ticker Company EPS Forecast
TD Toronto-Dominion Bank $1.55
DG Dollar General $2.00
CM Canadian Imperial Bank Of Commerce USA $2.81
SIG Signet Jewelers $0.71
GMS GMS Inc. $1.58
TAL TAL International $0.04
KR Kroger $0.66
ULTA Ulta Salon Cosmetics Fragrance $2.44
COO Cooper Companies $3.38
SMAR Smartsheet Inc. -$0.36
VRNT Verint Systems $0.53
GWRE Guidewire Software -$0.25

 

Friday (December 3)

Ticker Company EPS Forecast
PD PagerDuty Inc. -$0.09
BMO Bank Of Montreal USA $2.53

 

Big Money Rains on Veeva Systems

Veeva Systems, Inc. (VEEV) stock has jumped in 2021, climbing +16.7%., despite multiple rough patches this year. But the firm, which provides cloud-based software for life sciences companies, could rise even higher as its first-mover advantage keeps customers relying more on its services. But another likely reason is Big Money lifting the stock.

So, what’s Big Money? Said simply, that’s when a stock goes up in price alongside chunky volumes. It’s indicative of institutions betting on the shares.

Smart money managers are always looking for the next hot stock. And Veeva Systems has many fundamental qualities that are attractive.

This sets up well for the stock going forward. But how the shares have been trading points to more upside. As I’ll show you, the Big Money likes this one.

You see, fund managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way.

That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all the big money signals VEEV has made over time. Each green bar signals big trading volumes as the stock ramped in price:

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Source: www.mapsignals.com

In 2021, the stock has attracted 3 Big Money buy signals. They occurred months ago, but that could mean opportunity since the stock has been range bound lately.

Now, let’s check out technical action grabbing my attention:

  • 1-month outperformance vs. Health Care Select Sector SPDR Fund (+7.19% vs. XLV)

Outperformance is important for leading stocks.

Next, it’s a good idea to check under the hood. Meaning, I want to make sure the fundamental story is strong too. As you can see, Veeva Systems has been growing sales at a double-digit rate. Take a look:

  • 3-year sales growth rate (+28.8%)
  • 3-year earnings growth rate (+36.5%)

Source: FactSet

Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term.

In fact, VEEV has been a top-rated stock at my research firm, MAPsignals, for years. That means the stock saw buy pressure, strong technicals, and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.

VEEV has a lot of qualities that are attracting Big Money. And since 2015, it’s made this list 44 times, with its first appearance on 12/1/2015… and gaining 1,036.67% since. The blue bars below show the times that Veeva Systems was a top pick since 2015:

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Source: www.mapsignals.com

It’s been a top stock in the healthcare sector according to the MAPsignals process. I wouldn’t be surprised if VEEV makes additional appearances in the years to come. Let’s tie this all together.

The Bottom Line

Veeva Systems rally could have further to go. Big money buying in the shares is signaling to take notice. Shares could be positioned for further upside. Given the historical gains in share price and strong fundamentals, this stock could be worth a spot in a growth-oriented portfolio.

Disclosure: the author holds no positions in VEEV in personal or managed accounts at the time of publication.

Learn more about the MAPsignals process here.

Disclaimer

https://mapsignals.com/contact/

 

Best Growth Stocks September 2021

Oftentimes, that can be institutional activity. We’ll go over what that looks like in a bit. But, the 5 stocks we see as long-term candidates are ALGN, SEDG, ILMN, VEEV, & FB.

For MAPsignals, we believe that Big Money trading can alert you to the forward fundamental picture of a stock. We want the odds on our side when looking for the highest quality stocks.

Up first is Align Technology, Inc. (ALGN), which is the leader in invisible braces.

Strong growth candidates tend to have strong performance. Check out ALGN:

  • 1-year performance (+126%)
  • 1-year outperformance vs. healthcare ETF (+89.33% vs. XLV)
  • Historical big money signals

Just to show you what our Big Money signal looks like, have a look at the top buy signals Align Technology has made the past few years.

Blue bars are showing that ALGN was likely being bought by a Big Money player according to MAPsignals.

When you see a lot of them, I call it the stairway to heaven:

Chart, histogramDescription automatically generated
Source: www.MAPsignals.com

But, what about fundamentals? As you can see, Align’s revenue numbers have been strong:

  • 3-year sales growth rate (+19.52%)
  • 3-year earnings growth rate (+129.65%)

Next up is SolarEdge Technologies, Inc. (SEDG), which is a solar semiconductor firm.

Check out these technicals for SEDG:

  • 1-year performance (+39%)
  • 1-year performance vs. technology ETF (+2.12% vs. XLK)
  • Historical big money signals

Let’s look long-term. These are the top buy signals SolarEdge has made since 2015. Clearly the Big Money has been consistent for years:

Chart, histogramDescription automatically generated
Source: www.MAPsignals.com

Let’s look under the hood. As you can see, SolarEdge has grown revenues massively:

  • 3-year sales growth rate = +36.28%
  • 3-year earnings growth rate = +13.85%

Another growth name is Illumina, Inc. (ILMN), which is a sequencing and genomic analysis company.

Strong candidates for growth usually have big money buying the shares. Illumina has that. Also, the stock has been a rocket:

  • 1-year performance (+43%)
  • 1-year outperformance vs. healthcare ETF (+15.44% vs. XLV)

Below are the big money signals Illumina has made since 2015. That’s juice!

Chart, histogramDescription automatically generated
Source: www.MAPsignals.com

Now let’s look under the hood. Illumina’s sales growth is impressive. I expect more growth in the coming years:

  • 3-year sales growth rate = +6.27%
  • 3-year earnings growth rate = 0%

Number 4 on the list is Veeva Systems, Inc. (VEEV), which is a cloud-based software firm for the life sciences industry.

Here are the technicals important to me:

  • 1-year performance (+29.17%)
  • 1-year outperformance vs. healthcare ETF (+1.37% vs. XLV)
  • Historical big money signals

Below are the big money signals for VEEV since 2015:

Chart, histogramDescription automatically generated
Source: www.MAPsignals.com

Let’s look under the hood. Veeva Systems has been growing nicely:

  • 3-year sales growth rate = +28.83%
  • 3-year earnings growth rate = +36.47%

Our last growth candidate is Facebook, Inc. (FB), which is a social media giant.

Check out these technicals:

  • 1-year performance (+37.49%)
  • 1-year outperformance vs. technology sector (+.16% vs. XLK)
  • Historical big money signals

Facebook is a Big Money favorite…we call that an outlier:

Chart, histogramDescription automatically generated
Source: www.MAPsignals.com

Now look at these juicy growth numbers:

  • 3-year sales growth rate = +28.52%
  • 3-year earnings growth rate = +27.3%

The Bottom Line

ALGN, SEDG, ILMN, VEEV, & FB represent top growth stocks for September 2021. Strong fundamentals and big money buy signals make these stocks worthy of extra attention.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds long positions in ILMN in personal accounts. He holds no positions in ALGN, SEDG, VEEV & FB at the time of publication.

Investment Research Disclaimer

Best ETFs For August 2021

Hendrik Bessembinder proved it with his research in his paper “Do Stocks Outperform Treasury Bills?”

That’s why I spend my time crafting portfolios chock full of outlier stocks. If you choose right, you’ll have enormous gains on your hands in the years to come.

Now, I pick my ETFs perhaps a bit differently than other people. I can find outlier ETFs by tracking the Big Money. But that alone isn’t enough: when I catalog the components and find outlier stocks underneath… that’s the winning recipe.

That’s how I found the best big money ETFs for August.

First, I looked at all ETFs making Big Money signals by going to MAPsignals.com and scanning the Big Money ETF Buys and Sells chart. I looked for recent days with heavy buying (the bright blue spikes):

Chart, histogram

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Source: www.mapsignals.com

Once I knew which ETFs Big Money was buying, then I wanted the best opportunities. Remember: ETFs are just baskets of stocks. MAPsignals specializes in scoring more than 6,000 stocks daily. Therefore, if I know which stocks make up the ETFs, I can apply the stock scores to the ETFs. Then I can rank them all strongest to weakest.

So let’s get to the 5 best ETF opportunities for August. Given that usual seasonal summer volatility is here, and the stock market is a constant washing machine of sector rotations, we are taking a barbell approach this month. We went for 3 of the strongest ETFs and 2 weaker ones while still having strong fundamental qualities

#1 Technology Select Sector SPDR Fund (XLK)

First off, tech is king again. We can see that Big Money has been plowing money into this ETF over the last year. We saw a few fresh buy signals recently too:

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XLK holds some awesome stocks and one great example is Fortinet, Inc. (FTNT). Below we see the Big Money signals for FTNT:

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#2 iShares U.S. Home Construction ETF (ITB)

Anyone trying to buy a home right now may find it’s tougher than usual, especially here where I live in South Florida. Building supplies and home inventory is scarcer than usual due to the pandemic. But with rates remaining low for the near future and construction booming, the setup is nice to take advantage of an ITB pullback from highs (don’t let the red sells confuse you- if there is selling on quality ETFs holding great stocks, it’s often an opportunity):

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One great stock that ITB holds is Sherwin Williams Co. (SHW). The paint maker has their product deployed in many new homes being built as well as older ones being remodeled. It has awesome fundamentals and some recent big money buying:

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#3 iShares Russell 1000 Growth ETF (IWF)

Growth has seen its ups and downs this year. But IWF holds some phenomenal stocks. It’s also collecting lots of green:

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As I said, IWF holds a plethora of great growth stocks. One big winner that caught my eye is Veeva Systems, Inc. (VEEV). It was a huge winner last year and is suddenly seeing a resurgence:

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#4 ARK Next Generation Internet ETF (ARKW)

Cathie Woods, the star of Wall Street last year has hit some head winds. Her ETFs have suffered a bit after a monster performance last year. The ARKW saw huge buying through February then hit a wall. But the pullback, I believe, is an opportunity because it holds some terrific companies:

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It holds one of my all-time favorite stocks, Nvidia Corp. (NVDA). This stock is quite possibly the biggest outlier of all. They make chips and graphics cards for computers and are the best at it. Big Money loves this stock:

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#5 Invesco Solar ETF (TAN)

Solar is a boom-bust type of sector. It’s fallen significantly off its highs. Big Money loved TAN leading up through February as well. Then it got crushed:

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But TAN holds some great solar stocks that make money. One industrials company in their portfolio is Fastenal Co. (FAST), which saw Big Money buying earlier in the year, and has rallied to 1-year highs:

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Here’s a reminder for what to look for in the charts above:

  • When Big Money buying pours in, stocks tend to go up
  • Repeated buying usually means outsized gains

Let’s summarize here: the top 3 ETFs (XLK, ITB, and IWF) for August score well in terms of MAPsignals’ scores. That means Big Money has been pouring into them:

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ARKW and TAN however, rank lower on our list, mainly due to weaker technicals. That’s why I think these weaker ETFs represent great potential bargains.

The Bottom Line

XLK, ITB, IWF, ARKW, and TAN are my top ETFs for August 2021. Tech, homebuilders, and growth stocks have performed well lately. My bet is they continue.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds no positions in XLK, ITB, IWF, ARKW, TAN, FTNT, SHW, VEEV, NVDA, or FAST at the time of publication.

Investment Research Disclaimer

https://mapsignals.com/contact/

 

Veeva Systems Shares Surge 14% After Q1 Earnings Beat; Target Price $329

Veeva Systems shares surged as much as 14% on Friday, a day after the cloud-computing company reported better-than-expected earnings in the first quarter and lifted its annual revenue outlook to $1,815 million-$1,825 million.

The cloud-computing company said its total revenue rose 29% year over year to $433.6 million. That beat the Wall Street consensus estimates of around $410.1 billion. Subscription services revenues for the first quarter were $341.1 million, up from $270.2 million one year ago, an increase of 26% year over year.

For the quarter ended April 30, 2021, fully diluted net income per share was $0.71, compared to $0.54 one year ago, while non-GAAP fully diluted net income per share was $0.91, compared to $0.66 one year ago. That was higher than the market expectations of $0.78.

Veeva Systems shares rose as much as 14% to $302 on Friday, a day after the quarterly earnings report. The stock rose over 8% so far this year.

Analyst Comments

Veeva delivered in typical fashion a healthy beat, starting off FY22 on strong footing. With strength across both Commercial Cloud and Vault, and revenue flowing through to drive margins and FCF, elegance of the model is undeniable. As our estimates move up, we remain Overweight and increase price target to $350,” noted Stan Zlotsky, equity analyst at Morgan Stanley.

Veeva’s core products provide SaaS solutions for the Life Sciences industry, targeting $10B+ of spend today with potential overtime to address more of the $44B Life Sciences spend on IT, leveraging the company’s strong brand recognition and expanding its TAM into other regulated industries and use cases. As Veeva penetrates this large TAM, we see a sustainable 17% revenue CAGR over the next 5 years. Our Price Target is based on 2.4x EV/CY25 FCF/Growth adjusted, a premium to large-cap peers, but justified given the long term FCF durability and large market opportunity.”

Veeva Systems Stock Price Forecast

Seventeen analysts who offered stock ratings for Veeva Systems in the last three months forecast the average price in 12 months of $329.82 with a high forecast of $360.00 and a low forecast of $270.00.

The average price target represents an 11.80% increase from the last price of $295.00. Of those 17 analysts, 12 rated “Buy”, five rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley raised the stock price forecast of $350 from $340 with a high of $558 under a bull scenario and $204 under the worst-case scenario. The firm gave an “Overweight” rating on the cloud-computing company’s stock.

Several other analysts have also updated their stock outlook. UBS raised the target price to $270 from $250. Stifel lifted the target price to $345 from $325. Cowen and company increased the target price to $70 from $65. Citigroup raised the price target to $340 from $335. Piper Sandler lifted the target price to $360 from $350. JPMorgan slashed the target price to $309 from $313.

Check out FX Empire’s earnings calendar

Veeva Systems Shares Plunge Despite Strong Q3 Earnings; Target Price $301

Veeva Systems, an American cloud-computing company focused on pharmaceutical and life sciences industry applications, reported better-than-expected earnings in the third quarter of the fiscal year 2021 and forecasts revenue between $1,446-$1,448 million for the next fiscal.

Despite that Veeva Systems’ shares plunged about 10% to $257.47 in pre-market trading on Wednesday. However, the stock is up over 100% so far this year.

The cloud-computing company reported revenues of $377.5 million in the third quarter, beating the Wall Street consensus of $362 million, up from $280.9 million one year ago, an increase of 34% year-over-year. Subscription services revenues for the third quarter were $302.9 million, up from $226.8 million one year ago, an increase of 34% year-over-year.

For the third quarter, fully diluted net income per share was $0.60, compared to $0.52 one year ago, while non-GAAP fully diluted net income per share was $0.78, compared to $0.60 one year ago. That was higher than the market expectations of $0.68.

“Veeva reported a beat-and-raise F3Q with strength across all areas of the business. Guidance for F4Q and FY22 came in above consensus and looks conservative, especially as initial FY22 revenue guidance calls for a deceleration to 19% Y/Y growth. FY22 non-GAAP operating margin guidance reflects Veeva investing more in newer growth drivers, such as Data Cloud and MyVeeva, which we view as the right move. We maintain our BUY rating and $325 price target on Veeva Systems Inc,” said Rishi N. Jaluria, Senior Research Analyst at D.A. Davidson & Company.

Veeva Systems Stock Price Forecast

Seven equity analysts forecast the average price in 12 months at $301.71 with a high forecast of $335.00 and a low forecast of $225.00. The average price target represents a 6.16% increase from the last price of $284.20. From those seven analysts, five rated “Buy”, one rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $332 with a high of $532 under a bull-case scenario and $194 under the worst-case scenario. The firm currently has an “Overweight” rating on the cloud-computing company’s stock.

“Veeva delivered 11% billings upside in Q3, doubling the typical beat, while also driving op margins to company high of 41%. First look at FY22 revenue and profitability suggests plenty of conservatism to deliver beat/raise quarters. We roll forward estimates, remain OW and increase PT to $332,” said Stan Zlotsky, equity analyst at Morgan Stanley.

Several other analysts have also upgraded their stock outlook. Stifel raised their target price to $325 from $300. Needham upped the target price to $327 from $310. Raymond James increased the target price to $335 from $285. In August, Bank of America boosted their price objective to $302 from $230 and gave the stock a “buy” rating. Piper Sandler boosted their price target to $310 from $220and gave the stock an “overweight” rating.

Analyst Comments

“Veeva’s core products provide SaaS solutions for the Life Sciences industry, targeting $10B+ of spending today with potential overtime to address more of the $44B Life Sciences spend on IT, leveraging the company’s strong brand recognition and expanding its TAM into other regulated industries and use cases,” said Stan Zlotsky, equity analyst at Morgan Stanley.

“As Veeva penetrates this large TAM, we see a sustainable 17% revenue CAGR over the next 5 years. Our $332PT is based on 2.4x EV/CY25 FCF/Growth adjusted, a premium to large-cap peers, but justified given the long term FCF durability and large market opportunity,” Zlotsky added.

Upside and Downside Risks

Risks to Upside: 1) VEEV penetrates its TAM faster than expected as it gains traction outside life sciences. 2) Traction within newer products and add-ons accelerates – highlighted by Morgan Stanley.

Risks to Downside: 1) 70%+ seat penetration in CRM could limit growth while declining sales headcount in Life Sciences may be a headwind. 2) TAM may be more limited due to vertical-specific focus. 3) Increased competition on CRM by competitors such as Iqvia.

Check out FX Empire’s earnings calendar

Veeva Systems’ Price Target Raised to $323 with Overweight Rating, $435 in Best-Case Scenario: Morgan Stanley

Veeva Systems’, an American cloud-computing company focused on pharmaceutical and life sciences industry applications, price target was raised to $323 from $253 with Overweight stock rating, according to Morgan Stanley equity analyst Stan Zlotsky, who also said with consistent growth, profitability, and defensibility, Veeva is a unique software asset.

Late last month, Veeva reported total revenue of $353.7 million in the second quarter, up from $266.9 million one year ago, an increase of 33% year-over-year. Subscription services revenue for the second quarter were $283.5 million, up from $217.3 million one year ago, an increase of 30% year-over-year.

Veeva forecasts fiscal year ending January 31, 2021 total revenues between $1,415 and $1,420 million and fiscal third-quarter Total revenues between $360 and $362 million.

“In our new model, we raise our FY21 revenue estimates to $1,419 million (vs $1,387 million prior), within management’s updated guidance range of $1,415-1,420 million. Our FY21 revenue estimates imply YoY subscription/total revenue growth of +28.9%/+28.5% compared to +26.6%/+25.6% previously and includes ~$92.5 million of inorganic revenue from Crossix and Physician’s World (unchanged). We raise our FY21 operating margin estimates to 38.3%, versus 36.5% previously and similarly lift our FY22/FY23 margin estimates to 39.5%/40.8% from 37.6%/39.0% previously,” said Stan Zlotsky, equity analyst at Morgan Stanley.

“Our FY21/FY22 OCF estimates also increase to $544.1 million /$682.1 million from $505.8 million /$642.3 million previously. On the back of our raised estimates and improving confidence in Veeva’s FCF durability, we increase our price target to $323 from $253 previously. To arrive at our new price target, we apply a 53x multiple (vs 43x prior) or 2.5x EV/FCF/G (vs 2.2x prior) to our CY25 FCF estimate of $1,504 million ($1,357 million previously) and discount back at a 7.6% WACC (unchanged),” Zlotsky added.

Morgan Stanley target price under a bull-case scenario is $435 and $214 under the worst-case scenario. Veeva Systems had its price objective raised by equities research analysts at Truist to $320 from $222.

Several other equity analysts have also updated their stock outlook. Piper Sandler lifted their price target on Veeva Systems to $310 from $220 and gave the company an “overweight” rating. Stephens boosted their target price on Veeva Systems to $325 from $290 and gave the stock an “overweight” rating.

Twenty analysts forecast the average price in 12 months at $293.79 with a high forecast of $325.00 and a low forecast of $228.00. The average price target represents a 7.20% increase from the last price of $274.07. From those 20, 15 analysts rated ‘Buy’, five analysts rated ‘Hold’ and none rated ‘Sell’, according to Tipranks.

“Veeva’s core products provide SaaS solutions for the Life Sciences industry, targeting $10 billion+ of spend today with potential overtime to address more of the $44 billion Life Sciences spend on IT, leveraging the company’s strong brand recognition and expanding its TAM into other regulated industries and use cases. As Veeva penetrates this large TAM, we see a sustainable 18% revenue CAGR over the next 5 years,” Morgan Stanley’s Zlotsky added.

Upside risks: 1) Veeva penetrates its TAM faster than expected as it gains traction outside life sciences. 2) Traction within newer products and add-ons accelerates -highlighted by Morgan Stanley.

Downside risks: 1) 70%+ seat penetration in CRM could limit growth while declining sales headcount in Life Sciences may be a headwind. 2) TAM may be more limited due to vertical-specific focus. 3) Increased competition on CRM by competitors such as Iqvia.