We expect Veeva Systems Inc. (VEEV) to beat earnings when the company reports its fourth quarter and full year 2015 financial numbers on Mar 3. Last quarter, the company’s EPS was in line with the Zacks Consensus Estimate.
Let’s see how things are shaping up for this announcement.
What is Driving the Better-than-Expected Earnings?
Veeva’s expanding Customer Relationship Management (CRM) customer base is a key growth catalyst in our view. In the third quarter, Subscription revenues soared 58% year over year on the back of improved performance across all product lines and extended use of multi-channel CRM by customers.
In Dec 2014, Veeva opened two new European data centers in Germany and the U.K. The data centers are expected to support European and global customers’ needs for all of the company’s cloud-based solutions such as Veeva CRM, Veeva Network and Veeva Vault.
Veeva also announced the availability of the Veeva Network Provider Database in Europe. This is expected to provide life sciences companies with access to accurate healthcare professional (“HCP”), healthcare organization (“HCO”) and affiliations data. We believe these new initiatives will boost Veeva’s top line in the European region.
Why a Likely Positive Surprise?
Our proven model shows that Veeva is likely to beat earnings because it has the right combination of two key ingredients.
Zacks ESP: Veeva’s Earnings ESP stands at +12.50%. This is because the company’s Most Accurate estimate is poised at 9 cents, whereas the Zacks Consensus Estimate is pegged a tad lower at 8 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Veeva currently has a Zacks Rank #3 (Hold). Note that stocks with Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of Veeva’s Zacks Rank #3 and +12.50% ESP makes us reasonably confident of a positive earnings beat this quarter.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:
CST Brands (CST) has an earnings ESP of +11.11% and a Zacks Rank #1.
Douglas Dynamics (PLOW) has an earnings ESP of +13.33% and a Zacks Rank #1.
Endo International (ENDP) has an earnings ESP of +0.88% and a Zacks Rank #2.
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