by Morgan Stanley:
Veeva Systems Inc
VEEV , a cloud-computing company focused on the pharma and life sciences industry, is an underpriced asset within the broader SaaS universe, according to Morgan Stanley .
Morgan Stanley analyst Stan Zlotsky upgraded Veeva Systems from Equal-weight to Overweight and increased the price target from $69 to $72.
Veeva Systems has durable growth — fueled by an expanding $17-billion total addressable market — and margin potential that is not being reflected in current trading levels, Zlotsky said in a Tuesday note. A conservative setup into 2019 offers scope for estimates and shares to move up, he said.
The company's best-in-class economics are likely to drive longer-term operating margin to 43 percent, representing the highest margin potential in Morgan Stanley's coverage universe, Zlotsky said.
"Veeva's above average sales efficiency and a disciplined go-to-market has enabled the company to simultaneously deliver strong revenue growth and greater than 30-percent operating margins today, well above the 18-percent average among more mature SaaS peers," the analyst said.
Morgan Stanley estimates 16-percent revenue growth on a CAGR basis to $1.7 billion and a 36-percent operating margin by calendar year 2023, resulting in free cash flow of $593 million.
With the 12-percent pullback in Veeva Systems shares since June 2017 compared to a 14-percent gain for the SaaS peer group, Morgan Stanley sees an attractive entry point to rebuild positions in the shares.
Stop for now below 50$