Chicago, IL – March 11, 2024 – Zacks Equity Research shares Veeva Systems Inc. VEEV as the Bull of the Day and The Boston Beer Company, Inc. SAM as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Oracle ORCL.
Here is a synopsis of all three stocks:
Veeva Systems Inc. is a cloud computing firm that serves the life sciences field, with clients stretching from pharmaceutical giants to biotech upstarts.
Veeva posted strong fourth quarter results at the end of February and provided impressive guidance. VEEV stock has doubled the Zacks Tech sector in 2024 to retake some key moving averages. Yet Veeva trades 33% below its all-time highs as the wider tech sector looks a little overheated in the short term.
Veeva sells cloud-based offerings geared toward the pharmaceutical and life sciences industries. The company helps clients improve and streamline their critical business functions, with software and services for research and development, regulatory processes and compliance, safety, clinical trials, marketing, and beyond.
Veeva aims to help its clients bring "products to market faster and more efficiently" while maintaining compliance. Veeva closed 2023 (its FY24) with 1,432 customers, adding 44 from the prior year. Veeva's R&D Solutions segment boasted 1,078 customers and Commercial Solutions finished last year with nearly 700 customers.
Veeva is one of the only tech firms that joins together clinical operations and clinical data management. Veeva's Clinical Platform enables its customers to connect sponsors, research sites, and patients for more effective and efficient clinical trials.
Veeva grew its fiscal 2024 (last year) revenue by 10%, driven by a 10% increase in subscription services, which accounted for roughly 80% of total sales. The firm's fourth quarter sales popped 12% to finish the year on an upbeat note. Veeva's adjusted full-year earnings jumped 13%, capped off by a 20% expansion in the fourth quarter.
Veeva provided upbeat revenue and earnings guidance. The firm's adjusted earnings outlook has improved by 8% for FY25 and FY26 since its report. The company's most accurate/recent EPS estimates are trending higher as well to help it land a Zacks Rank #1 (Strong Buy).
Veeva's adjusted earnings are projected to surge 23% in its FY25 (this year) and then pop 12% higher next year, based on current Zacks consensus estimates.
Veeva is expected to post 16% revenue growth in its FY25 and another 14% next year to climb from $2.36 billion last year to $3.12 billion.
Current estimates mark a slowdown compared to the 25% to 35% sales growth the cloud firm posted between 2016 and 2022. But the stock has already been punished for cooling sales growth and its forecast shows progress after its 10% expansion this past year.
Veeva shares have doubled the Zacks tech sector over the past decade, up 611%. The stock has fallen behind during the trailing five years, up 94% vs. 132% for tech. VEEV is trending in the right direction, up 36% in the last 12 months, including a 32% surge in the past three. Despite the run, VEEV trades 33% below its 2021 peaks.
VEEV's recent charge helps it trade above its 21-day, 50-day, and 200-day moving averages. The firm also achieved the bullish golden cross in early February, where the shorter-dated trendline climbed above the longer-term marker. The stock has found support at its 21-day average as it hovers below overbought RSI levels, similar to the Nasdaq.
Veeva is on the cusp of retaking its long-term 200-week moving average, attempting to breakout above its 2022 levels and up to its records.
Veeva's valuation levels are likely contributing to its underperformance since investors aren't willing to pay as much of a premium for the firm amid slowing growth.
But it is focused on boosting profits and its PEG ratio, which factors in its long-term earnings growth outlook, sits at 2.7. This represents a 73% discount to Veeva's five-year highs and 40% vs. its median.
Veeva operates an essential business that provides investors access to biotech and pharmaceuticals without the boom-and-bust cycles common throughout those segments.
Veeva boasts a stellar balance sheet, with $5.91 billion in total assets and $1.26 in liabilities, with almost no long-term debt
The Boston Beer Company, Inc. shares tumbled at the end of February following its disappointing quarter and rough guidance. Wall Street is also nervous about what's next after Boston Beer announced its CEO transition amid challenging times for the company.
Boston Beer is one of the standouts and vanguards of American craft beer. SAM then disrupted the industry in a massive way when it launched Truly Hard Seltzer in 2016.
Boston Beer kickstarted the biggest alcoholic beverage trend since light beer. Truly and hard seltzer's expansion forced Anheuser-Busch InBev, Molson Coors, Constellation Brands and countless others to flood the market with their hard seltzers.
Boston Beer's revenue surged 15% in fiscal 2018, 26% in FY19, 39% in 2020, and another 19% in FY21. SAM posted roughly 2% revenue growth in FY22 and a -4% sales decline in 2023 as it proved difficult to compete against its booming, Truly-boosted run. Truly faces a tough test ahead as the seltzer space grows more saturated.
Boston Beer's Q4 depletions decreased 9%, with shipments down 12%. The company's fourth quarter sales dropped 12% and it reported an adjusted quarterly loss of -$1.49 per share, falling way short of our -$0.22 estimate.
Boston Beer's adjusted earnings outlook is down 11% for FY24 and FY25. Plus, its first quarter consensus tumbled from +$0.41 to a -$0.02 loss.
Boston Beer is still projected to grow its sales and earnings in 2024 and 2025. But its negative revisions help it land a Zacks Rank #5 (Strong Sell) right now.
The disappointing quarterly results and guidance were accompanied by the news that CEO Dave Burwick would retire effective April 1. Michael Spillane, a Nike veteran, is set to take over the chief executive position to help Boston Beer get back on track.
Boston Beer stock has plummeted roughly 75% from its April 2021 peaks. The stock has been on a wild ride during the last 12 months, including a 19% drop since its February 27 earnings release.
SAM's recent drop sent it back below its 50-week moving average and it is far below its 200-week. Plus, Boston Beer stock trades at 27.2X forward 12-month earnings, which is rich compared to its Beverages – Alcohol industry's 18.3X. Therefore, it might be best to stay away from Boston Beer unti it proves a turnaround is in its sights.
Enterprise software giant Oracle is set to report fiscal third-quarter earnings results on Monday after the bell. Following an AI-induced rally throughout much of last year, ORCL stock has taken a breather lately. A Zacks Rank #3 (Hold), Oracle has exceeded the earnings mark in each of the past four quarters. Given the company's positive track record, is ORCL a buy?
Current estimates call for Q3 earnings of $1.37 per share, reflecting a 12.3% improvement relative to the same quarter last year. The software provider has exceeded the earnings mark in each of the past four quarters, delivering an average earnings surprise of 3.32% over that timeframe. Sales are anticipated to have risen 7.07% to $13.27 billion during the third quarter.
Earnings estimates have remained steady over the past 60 days. ORCL stock stumbled following its latest quarterly report back in December, when the company missed revenue estimates. Given that earnings announcements can be volatile, investors should proceed with caution heading into the announcement.
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