Veeva Systems' (Nasdaq: VEEV) was lower by nearly 20% following the company's Q4 results. For the quarter, the company did top analysts' estimates on the top and bottom line. However, shares sold off on management's cautious commentary and outlook for its next quarter.
Veeva is one of the top healthcare IT companies, and it's been a beneficiary of the growth in both categories over the last decade. It's been one of the best-performing stocks since its IPO in 2013 due to its steady growth, wide moat around its business, and favorable economics of a cloud computing business operating in healthcare and life sciences. Since its IPO, Veeva is up 392%, however, it's down 45% from its high in August 2021.
Inside the Numbers
In Q4, Veeva posted adjusted earnings per share of $0.90, a 15% gain and above estimates of $0.87 per share profit. Revenue also beat expectations at $485.5 million vs $481 million, a 22% increase from last year.
However, the stock is under heavy selling pressure due to its underwhelming outlook for Q1. The company expects Q1 revenue between $494 million and $496 million. This is well below consensus estimates of $526 million. Similarly, its EPS forecast also disappointed at $0.915 vs $0.98.
This dip could prove to be a great buying opportunity for those investors who still believe in the company's long-term vision and its ability to execute on it. Others could see it as another overvalued growth stock that is going to have trouble rallying with rates rising and growth slowing.
Analysts and investors clearly didn't accept the company's explanation. They said they are having trouble hiring workers and that certain deals are taking longer to close due to their size.
Following the earnings report, there has been a wave of price target cuts by Wall Street analysts and a couple of downgrades. The combination of slowing growth and a high rate, high inflation environment is not good for growth stocks, no matter how appealing their businesses seem. Therefore, investors should probably remain patient before looking to buy the dip.