Taking Stock of Veeva Systems’ Risk Factors

Veeva Systems Inc. (VEEV) recently posted better-than-expected performance for the third quarter on both it top-line and bottom-line fronts. VEEV provides cloud-based solutions for the life sciences industry.

Q3 Performance

Higher Subscription Services revenue helped Veeva generate total revenue of $476.1 million, an increase of 26.1% over the prior year, exceeding estimates by $10.2 million. Meanwhile, earnings of $0.97 per share exceeded expectations by $0.09.

For the fourth quarter, Veeva expects revenue to land between $478 million and $480 million, while earnings per share are expected at $0.88 per share. With these developments in mind, let us take a look at the changes in Veeva’s key risk factors that investors should know.

Risk Factors

According to the TipRanks Risk Factors tool, Veeva’s top risk category is Finance & Corporate, contributing 34% to the total 44 risks identified. In its recent quarterly report, the company has changed two key risk factors.

Under the Production risk category, Veeva highlighted that if it fails to attract and retain a highly-skilled workforce, then its business could see an adverse impact. Furthermore, efforts to attract and retain such employees may result in higher expenses for Veeva. (See Insiders’ Hot Stocks on TipRanks)

Veeva has experienced and expects to continue to experience difficulty hiring and retaining employees with suitable qualifications. It has also seen intense recruitment of its employees by competitors and other technology companies. Amid current job market trends, Veeva increased salaries for the majority of its employees by 5% in September.

Meanwhile, under the Ability to Sell risk category, Veeva noted that its core Veeva CRM application has realized significant market penetration in pharmaceutical and biotechnology companies. If the company is not successful in further increasing the use and adoption of its core CRM application, then the growth of Veeva’s Commercial Solutions revenue may see an adverse impact.

Compared to a sector average of 14%, Veeva’s Ability to Sell risk factor is at 20%.

Wall Street’s Take

On December 2, Robert W. Baird analyst Joseph Vruwink reiterated a buy rating on the stock, but decreased the price target to $310 from $349 (18.1% upside potential).

The analyst noted that the company’s outlook for fiscal 2023 came in slightly lower than expectations, and certain items on the margin front denote a moderation in growth for the company.

Consensus on the Street is a Strong Buy based on 9 Buys and 3 Holds for the stock. The average Veeva Systems price target of $324.45 implies a potential upside of 23.66% for the stock. However, the company’s shares have dropped 18.1% in the past month.