Veeva Systems (VEEV:NYS) Fundamental Valuation Report

Veeva Systems (VEEV:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Veeva Systems(VEEV:NYS)

Healthcare:Health Information Services

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$277.76 (USD) 05/03/2021

Weighted Valuation
$283.48 (USD)

Overall Rating
Fairly valued to slightly Undervalued by 2.1%

Valuation Models Multiples: $192.20 (USD)
Comparables: $366.56 (USD)
Valuation Methods This company is:
Cash Flow: Overvalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation
According to Analyst consensus at $291.67 this stock is Undervalued

Company Overview (VEEV:NYS USD)

Price 277.76
Range 277.05 – 284.50
52 week 191.25 – 318.09
Open 283.57
Vol / Avg. 713486/723203
Mkt cap 42.28B
P/E 117.69
Div/yield 0.00/0.00
EPS 2.36
Shares 152.22M
Beta 0.73

Company Description

Veeva is a leading supplier of software solutions for the life sciences industry. The company’s best-of-breed offering addresses operating and regulatory requirements for customers ranging from small, emerging biotechnology companies to departments of global pharmaceutical manufacturers. The company leverages its domain expertise and cloud-based platform to improve the efficiency and compliance of the underserved life sciences industry, displacing large, highly customized and dated enterprise resource planning, or ERP, systems that have limited flexibility. As the vertical leader, Veeva innovates, increases wallet share at existing customers, and expands into other industries with similar regulations, protocols, and procedures, such as consumer goods, chemicals, and cosmetics.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for VEEV:NYS

Using a discounted cash flow model we generated an intrinsic value of $117.91 (USD) for VEEV:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

VEEV:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $117.91 1% 5% 1% 5%
WACC (or Ke) 5.07 $148.53 $97.57
Terminal Growth Rate 0.10 $99.38 $145.77
Tax Rate 0.04 $124.13 $111.69
Cash Flow 978,477,500 $111.89 $123.93
Capital Expenditures -5,621,800 $117.88 $117.94
Long Term Debt 0 $117.91 $117.91

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $366.56 (USD) for VEEV:NYS. We also generated a valuation of $141.46 (USD) using other metrics and comparables.
The comparable companies were Teladoc Health (TDOC:NYS), R1 RCM (RCM:NAS), Cerner (CERN:NAS), 10x Genomics (TXG:NAS) and Signify Health (SGFY:NYS).

Company VEEV:NYS End Date Value
Earnings/Share $2.36 (USD)
Book Value/Share $14.89 (USD)
Sales/Share $9.12 (USD)
Cash Flow/Share $3.43 (USD)
EBITDA/Share $2.53 (USD)
Price Based on Comps Adjustment Factor (%)
$132.74 (USD) 56.9
$431.08 (USD) 86.6
$176.56 (USD) 0.0
$274.60 (USD) 85.0
$135.31 (USD) 0.0
VEEV:NYS Ratios Used Average Values TDOC:NYS RCM:NAS CERN:NAS TXG:NAS SGFY:NYS
117.69 PE Ratio 56.24 0.00 82.33 30.15 0.00 0.00
18.66 PB Ratio 28.95 1.59 80.77 5.12 28.34 0.00
30.47 PS Ratio 19.37 13.16 3.73 4.27 65.18 10.50
80.99 PCF Ratio 80.18 0.00 76.75 16.35 0.00 147.45
99.89 EV to EBITDA 53.40 0.00 37.00 13.53 0.00 109.68

Multiples

Using a multiples approach we generated a valuation of  $192.20 (USD) for VEEV:NYS

Company VEEV:NYS End Date Value
Earnings/Share $2.36 (USD)
Book Value/Share $14.89 (USD)
Sales/Share $9.12 (USD)
Cash Flow/Share $3.43 (USD)
EBITDA/Share $2.53 (USD)
Price Based on Comps Adjustment Factor
$224.17 (USD) 0
$199.55 (USD) 0
$178.78 (USD) 0
$191.35 (USD) 0
$167.17 (USD) 0
Ratios Ratio Average
PE Ratio 94.99
PB Ratio 13.40
PS Ratio 19.61
PCF Ratio 55.79
EV to EBITDA 65.98

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  VEEV:NYS for the last 8 years was  11.77

We ran the Adjusted Book Value for  VEEV:NYS and generated a book value of  $14.90 (USD)
By multiplying these we get an adjusted valuation of  $175.50 (USD)

Analyst Data

In the Stockcalc database there are 3 analysts that provide a valuation for VEEV:NYS. The 3 analysts have a concensus valuation for VEEV:NYS for 2022 of $291.67 (USD).

VEEV:NYS Veeva Systems

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
1 3 0 3.5000 Hold 2021-4-30

Current Price: 277.76 USD

Analyst Consensus
USD Millions 2022 2023 2024
Mean EPS 3.23 3.83 4.62
# EPS Analysts 4 4 1
Mean Revenue 1,769.70 2,122.20 2,540.20
# Revenue Analysts 4 4 1
Mean Target Price 291.67
Mean Cash Flow 3.89 4.53 5.04
Mean EBITDA 593.50 707.10 977.50
Mean Net Income 527.00 632.40 777.60
Mean Debt Outstanding -2,130.00 -2,718.00
Mean Tax Rate 21.00 21.00
Mean Growth Rate 21.66
Mean Capital Expenditure 15.10 18.90 15.20

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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