The rapid tech integration in the life sciences industry has paved the way for breakthrough innovations in drug discovery to treat critical diseases. Increasing investments in the life science industry are expected to transform the healthcare industry in the coming years, facilitated by descriptive analytics and cloud-based software platforms.
The surging demand for these software platforms in the life sciences industry incentivizes companies to innovate and grow. And the global life science analytics software market is expected to grow at 12.4% CAGR through 2028.
Given this backdrop, we think the shares of fundamentally sound life sciences software companies IQVIA Holdings Inc. (IQV) and Veeva Systems Inc. (VEEV) could deliver significant returns in the near term.
IQVIA Holdings Inc. (IQV)
IQV provides advanced analytics, technology solutions, and clinical research services to the life sciences industry. The Durham, N.C.-based company offers clinical development strategies, therapeutic expertise, predictive and prescriptive analytics, and patient retention services. It serves pharmaceutical, biotechnology, device and diagnostic, and consumer health companies.
On November 19, IQV launched Grants and Funding Management, a new module within its Orchestrated Customer Engagement (OCE) solutions portfolio that provides life sciences companies with a solution to accelerate funding requests, eliminate errors, monitor compliance, track payments, and demonstrate the impact of giving programs globally. Using its advanced user interface (UI) and automated end-to-end workflows, this launch has further expanded IQV’s reach in the engagement management space and helped improve business efficiencies.
On September 30, 2021, Polpharma Group BV, a leading pharmaceutical company in Rx and OTC medications, selected IQV’s Orchestrated Customer Engagement (OCE) platform as part of its 2021-2025 growth strategy to improve its sales force productivity through the automation of administrative and repetitive tasks with its AI/ML capabilities and speed rollout of multi-channel digital marketing campaigns to clients in Central and Eastern Europe. IQV’s revenues rose 21.7% year-over-year to $3.39 billion for its fiscal third quarter, ended September 30, 2021. The company’s income from operations came in at $302 million, indicating a 61.5% increase from the prior-year period. While its adjusted net income increased 33% year-over-year to 423 million, its adjusted net income increased 33.1% to $2.17. The company had $1.47 billion in cash and cash equivalents as of September 30, 2021.
Analysts expect the stock’s EPS to increase 38.8% year-over-year to $8.91 for the current year. A $13.83 billion consensus revenue estimate for the current year represents a 21.7% rise from the prior-year period. IQV surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock’s EPS is expected to grow at a 22.1% rate per annum over the next five years. The stock has gained 44.6% in price year-to-date.
IQV’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has an A grade for Growth and a B grade for Stability and Sentiment. Click here to see the additional ratings for IQV (Value, Momentum, and Quality).
Of the 54 stocks in the Medical – Diagnostics/Research industry, IQV is ranked #9.
Veeva Systems Inc. (VEEV)
VEEV provides cloud-based software solutions for the global life sciences industry. The Pleasanton, Calif.-based company offers enterprise applications, multi-channel platforms, customer relationships, and content management solutions designed to meet its customers’ needs and their strategic business functions, from research and development (R&D) to commercialization.
On November 18, VEEV showcased the Veeva CRM Engage Connect compliant messaging and content sharing capabilities at its European Veeva Commercial and Medical Summit Connect event, which allows healthcare professionals to gain access to the information and resources they need by connecting with life sciences companies and reps through the Veeva Engage app instantly. The provision of these efficient, on-demand services is expected to generate high demand from healthcare professionals in the future.
On November 16, the Center for Breakthrough Medicines (CBM), an innovative cell and gene therapy-focused contract development and manufacturing organization, adopted VEEV’s Veeva Vault Quality Suite to modernize development, drive manufacturing efficiency, and increase collaboration across departments, suppliers, and customers. VEEV is looking forward to helping CDM to build the world’s largest cell and gene therapy manufacturing and testing facility to enable the delivery of groundbreaking treatments for patients for years to come.
For its fiscal second quarter, ended July 31, 2021, VEEV’s total revenues increased 28.8% year-over-year to $455.59 million. The company’s non-GAAP gross profit came in at $345.42 million, up 29.5% from the prior-year period. Its non-GAAP operating income came in at $191.59 million, representing a 32.7% increase from its year-ago period. VEEV’s non-GAAP net income came in at $125.67 million, marking a 31.2% year-over-year improvement. And its non-GAAP EPS increased 30.6% to $0.94. As of July 31, 2021, the company had $1.06 billion in cash and cash equivalents.
A $3.55 consensus EPS estimate for the current year represents a 20.7% rise from the prior-year period. VEEVE surpassed the Street’s EPS estimates in each of the trailing four quarters. And analysts expect the stock’s revenue to grow 25.2% year-over-year to $1.83 billion in the current year. Analysts expect the stock’s EPS to grow at a 17.9% rate per annum over the next five years. The stock has gained 3.8% in price year-to-date.
VEEV’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
The stock has an A grade for Quality and a B grade for Growth and Sentiment. Click here to see the additional ratings for VEEV (Value, Momentum, and Stability).
VEEV is ranked #18 of 87 stocks in the Medical – Services industry.
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IQV shares were trading at $260.26 per share on Wednesday morning, up $1.13 (+0.44%). Year-to-date, IQV has gained 45.26%, versus a 24.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...
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