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Analysts Tab Veeva Systems as a Top Value Pick

Morningstar analysts rate the stock a buy with huge upside potential

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May 25, 2022
Summary
  • Veeva's goal of $3 billion in sales is estimated to be within reach by 2025.
  • Other health care favorites selling at a discount include Grifols, Beam and Fate, says U.S. News.
  • Roche, Pfizer, UnitedHealth and Merck also make the list.
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A Bay Area provider of cloud-based software for the life sciences industry is among the top 10 Wall Street favorites serving the health care industry, according to an article on U.S. News.

Veeva Systems Inc. (VEEV) isn’t the most well-known of the companies on the list of favorites, which mostly includes heavyweights such as Roche Holding AG (

RHHBY, Financial), UnitedHealth Group Inc. (UNH, Financial), Pfizer Inc. (PFE, Financial) and Merck & Co. Inc. (MRK, Financial). But the 15-year-old company is no shrinking violet. It has a market cap of more than $25 billion and recorded 2021 sales of $1.8 billion.

Analysts surveyed by Morningstar (

MORN, Financial) think the company is undervalued at its current level of around $164, which is well off its 52-week high of $344.00. Morningstar analyst Dylan Finley says labor market constraints will affect growth in the first half of 2022, but he says the stock's nearly 30% decline so far this year has made it increasingly attractive in his view. He thinks the company’s goal of $3 billion in annual revenue by 2025 is within reach. Morningstar gives the stock a buy rating and a $275 fair value estimate. Seven other analysts also give the stock a buy rating while six say it's a hold, reported Yahoo Finance.

The Zacks Consensus Estimate for the company’s fiscal first-quarter earnings, scheduled to be released on June 1, is $0.92, which would be up just over 1% from the same period a year earlier. Revenues are expected to come in at $495 million, up more than 14% from 2021.

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Caption: Veeva has a long way to go until it’s even in the neighborhood of the analyst consensus price target of $275

The company’s first cloud-based content management system, built specifically for life sciences, is called Veeva Vault. It is expected to report adding several new customers in the first quarter. Recent customers coming on board include Boehringer Ingelheim, Idorsia Ltd (IDRSF) and PharmaEssentia Corporation (6446.TWO) of Taiwan.

Other lesser-known names on the U.S. News list of Wall Street health care favorites include Girofols SA (

GRFS, Financial), Beam Therapeutics Inc. (BEAM, Financial) and Fate Therapeutics Inc. (FATE, Financial).

Girofols SA is a producer of blood plasma-derived therapies. Analysts believe it will be in better shape this year after 2021, when the company’s plasma supply was hurt by the pandemic. Morningstar gives the stock a buy rating and a $17.10 fair value estimate compared to the current price of around $13.05, which has risen 12% year-to-date.

Beam Therapeutics uses the gene-editing tool CRISPR to change single bases in the genome with a technique called base editing. Beam is currently moving into clinical development with its sickle cell disease treatment. In January, Beam traded at more than $82 but has been on the skids since then, sliding to just under $32. The company has a long way to go until it achieves the price target set by Bank of America (

BAC, Financial) of $154.

Fate Therapeutics is a clinical-stage biotech company developing cell therapies using stem cells. Bank of America analyst Tazeen Ahmad is concentrating on the company's treatment being tested for leukemia and lymphoma. He says investors should expect an update on the tests in the second half of the year. Bank of America has a buy rating and a $112 price target for Fate, which has shed about 65% of its value since the beginning of the year and now trades at just under $22.00.

Others on the list besides those companies already mentioned are Catalent Inc. (

CTLT, Financial) and CRISPR Therapeutics AG (CRSP, Financial).

Disclosures

I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure
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