Why Veeva Systems Inc. Shares Are Soaring

Source: Veeva Systems

Although we don't believe intiming the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What's happening: Shares in Veeva Systems jumped by more than 10% earlier today after the company announced that drug giant GlaxoSmithKline plc had signed on to use its cloud based solutions and that it had hired away a healthcare enterprise software industry veteran from Medidata Solutions.

Why it's happening: The news of the client win and hiring is being welcomed by investors who endured a drop in shares two weeks ago following Veeva Systems' fourth-quarter earnings release.

The post-earnings sell off in the company's shares was surprising given that Veeva Systems reported sales and earnings that exceeded Wall Street consensus forecast.

In the fourth quarter, Veeva Systems' sales grew 38.5% year over year to $87 million and its adjusted EPS jumped 71.4% to $0.12, which was $0.03 better than analysts expected.

Instead of focusing on those results, however, investors seemed to concentrate more on worries over possible expense headwinds tied to the company's acquisition of Qforma CrowdLink and suggestions that quarterly results failed to eclipse the high-end of some analysts' estimates.

Regardless, the news today that GlaxoSmithKline will use Veeva Systems' customer relationship management software to manage its relationships marks another important customer win for the company. Additionally, the hiring of Alan Mateo, Medidata's former EVP of field operations, as Veeva Systems' EVP of global sales could also help the company deliver on its 2016 sales guidance.

Currently, the company expects revenue to reach between $390 and $395 million and for adjusted EPS to be between $0.43 and $0.45 for the year ending January 2016. Based on those targets, Veeva Systems expects revenue and EPS will improve by at least 24.6% and 16.2% from fiscal 2015, respectively.

The article Why Veeva Systems Inc. Shares Are Soaring originally appeared on Fool.com.

Todd Campbell owns shares of Veeva Systems. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. The Motley Fool recommends Veeva Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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