Veeva Systems Inc. VEEV is well-poised for growth in the coming quarters, courtesy of its strong product portfolio. The optimism, led by a solid second-quarter fiscal 2025 performance and strategic deals, is expected to contribute further. Stiff competition and rising operational costs persist.

This Zacks Rank #3 (Hold) company’s shares have risen 22.9% in the year-to-date period compared with 30.2% growth of the industry. The S&P 500 composite has risen 26.3% during the said time frame.

The renowned provider of cloud-based software applications and data solutions for the life sciences industry has a market capitalization of $38.36 billion. The company projects 24.6% growth for the next five years and expects to maintain its strong performance in the future. It delivered a trailing four-quarter average earnings surprise of 5.41%.

Image Source: Zacks Investment Research

Reasons Favoring VEEV’s Growth

Strong Q2 Results: Veeva Systems’ solid second-quarter fiscal 2025 results buoy optimism. The uptick in the overall top and bottom lines and robust performance by the Subscription services segment during the quarter were impressive. Gross profit improved 20.1% to $505.8 million. The gross margin expanded 340 basis points (bps) to 74.8%.

Robust Product Portfolio: We are optimistic about Veeva Systems’ unique solutions, which include Veeva Vault, Veeva CRM (customer relationship management), Veeva Network and Veeva OpenData.

VEEV continues to expand its product portfolio with new launches. In August, the company reached a milestone on its path to connect sales, marketing, medical, and service to enable true customer centricity with the release of Vault CRM Service Center.

Veeva Systems also added 14 new Vault CRM customers in the fiscal second quarter. The company commented on the latest release of Veeva Site Connect, which is part of the Veeva Clinical Platform. Veeva Site Connect plays a critical role as the industry moves to simplify and standardize site collaboration, and seven of the top 20 biopharmas have already adopted Veeva Site Connect to streamline trials. The company released the latest version of Veeva Site Connect, adding powerful new capabilities and a streamlined site-centric experience to simplify and standardize sponsor-site collaboration.

Also, Veeva Clinical Database (“CDB”), a significant innovation in clinical data, has been selected by seven top 20 biopharmas to reduce manual query work and increase speed and efficiency in trials. In September, VEEV announced the expansion of Veeva Vault QMS, adding new capabilities to manage medtech field actions and product recalls that will enable oversight, timeliness and accuracy throughout the field action process. During the fiscal second quarter, early customers started using the Vault Direct Data API to power artificial intelligence and other use cases that will help retrieve data 100 times faster compared to traditional APIs.

Strategic Deals: We are upbeat about Veeva Systems’ recent few collaborations. In October, the company announced a long-term strategic partnership with Walgreens Boots Alliance to help life sciences companies improve patient outcomes by using VEEV’s Data Cloud and Clinical Platform to connect its extensive network of community locations. In June, the company announced a partnership with Vita Global Sciences that is likely to help the latter improve its clinical data management processes as well as collaborations with key trial stakeholders. The latest adoption of Veeva Vault electronic data capture (EDC), part of the Veeva Clinical Platform, is likely to boost the Veeva Development Cloud business.

In June, Veeva Systems also declared that Hangzhou Tigermed Consulting Co., Ltd. has selected Veeva Vault EDC as its technology foundation for modern EDC.

Factors That May Offset the Gains for VEEV

Stiff Competition: Veeva Systems operates in a highly competitive market. In new sales cycles within the company’s largest product categories, it competes with other cloud-based solutions from providers, such as IQVIA Inc., that make applications geared toward the life sciences industry. VEEV’s Commercial Cloud and Veeva Vault application suites also compete to replace client server-based legacy solutions offered by companies like Oracle, Microsoft Corporation and other smaller application providers.

Rising Costs: VEEV has been incurring huge operating expenses in recent months. Sales and marketing expenses for the second quarter of fiscal 2025 increased 4.7% year over year. Management anticipates a further increase in these expenses throughout fiscal 2025. This is mainly due to employee-related costs as the company expands its workforce to bolster sales and marketing efforts for its product offerings and continue growing its sales capacity across all solutions. In the fiscal second quarter, total operating expenses increased 6.9% year over year. 

Estimate Trend

Veeva Systems is witnessing a stable estimate revision trend for fiscal 2025. In the past 60 days, the Zacks Consensus Estimate for earnings has moved north 1 cent to $6.23 per share.

The Zacks Consensus Estimate for third-quarter fiscal 2025 revenues is pegged at $684.2 million, indicating an 11% improvement from the year-ago quarter’s reported number. EPS estimate is pinned at $1.57, implying 17.2% improvement year over year.

Veeva Systems Inc. Price

Veeva Systems Inc. price | Veeva Systems Inc. Quote

Key Picks

Some better-ranked stocks from the medical industry are Masimo MASI, AngioDynamics ANGO and Globus Medical GMED.

Masimo, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 10.4% for 2025. MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%. You can seethe complete list of today’s Zacks #1 Rank stocks here.

Masimo’s shares have risen 37.2% year to date compared with the industry’s 6.7% growth.

AngioDynamics, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 38.2% for 2025. ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.

AngioDynamics’ shares have lost 8.9% year to date against the industry’s 6.7% growth.

Globus Medical, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 12.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 56.5% year to date compared with the industry’s 6.7% growth.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

AngioDynamics, Inc. (ANGO) : Free Stock Analysis Report

Masimo Corporation (MASI) : Free Stock Analysis Report

Globus Medical, Inc. (GMED) : Free Stock Analysis Report

Veeva Systems Inc. (VEEV) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research