The bears came for Veeva Systems (NYSE: VEEV) on an otherwise rather bullish Thursday for the stock market. The healthcare tech company’s shares lost nearly 2% of their value, while the bellwether S&P 500 index was in the black at 0.3%. An analyst’s price-target cut was the culprit.
Oppenheimer prognosticator Ken Wong was the man behind the move. Before market open, he shaved $25 off his Veeva price target for a new level of $225 per share. Despite the cut, Wong maintained his outperform (i.e., buy) recommendation on the stock.
He wasn’t singling out Veeva. Rather, he scaled back estimates across much of his coverage universe to adjust for the current shaky macroeconomic environment, which combined with other factors could spur businesses to lower their tech budgets. As a provider of customer relationship management (CRM) solutions for the healthcare industry, Veeva is potentially in the line of fire for such reductions.
Investors are clearly worried about this, too. They traded Veeva stock down 15% in December; what didn’t help was the third quarter results the company released that month. Although it delivered a double-digit revenue increase to a level that beat analyst expectations (along with profitability), it guided for flat quarter-over-quarter growth for its current (fourth) quarter.
So at the end of the day, Wong’s price-target cut is basically reflecting current market sentiment on Veeva. But we should bear in mind that this beaten-down stock backs a company that is a strong player in its niche, and is still growing and booking bottom-line profits. It might just be a buy on weakness these days.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Veeva Systems. The Motley Fool has a disclosure policy.