Veeva (VEEV) Hits 52-Week High, Can the Run Continue?

Have you been paying attention to shares of Veeva Systems (VEEV)? Shares have been on the move with the stock up 32% over the past month. The stock hit a new 52-week high of $104.54 in the previous session. Veeva Systems has gained 87.5% since the start of the year compared to the 14% move for the Zacks Computer and Technology sector and the 32.5% return for the Zacks Internet - Software industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 23, 2018, Veeva reported EPS of $0.39 versus consensus estimate of $0.34.

For the current fiscal year, Veeva is expected to post earnings of $1.48 per share on $843.19 million in revenues. This represents a 59.14% change in EPS on a 22.99% change in revenues. For the next fiscal year, the company is expected to earn $1.71 per share on $993.17 million in revenues. This represents a year-over-year change of 15.95% and 17.79%, respectively.

Valuation Metrics

Veeva may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Veeva has a Value Score of F. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 70.1X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 92.9X versus its peer group's average of 28.1X. Additionally, the stock has a PEG ratio of 3.64. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Veeva currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Veeva passes the test. Thus, it seems as though Veeva shares could have potential in the weeks and months to come.

How Does Veeva Stack Up to the Competition?

Shares of Veeva have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including One Stop Systems (OSS), New Relic (NEWR), and CACI International (CACI), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.

The Zacks Industry Rank is in the top 41% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Veeva, even beyond its own solid fundamental situation.

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