Even though cloud-based service providers are vulnerable to cyber-attacks, governments and businesses have been spending billions of dollars on cloud-based services to facilitate the ongoing digital transformation and remote working. According to a Synergy Research Group report, cloud infrastructure spending reached $42 billion in the second quarter of 2021.
Investors’ interest in the cloud industry is evidenced by the WisdomTree Cloud Computing Fund’s (WCLD) 12.5% gain over the past three months versus the SPDR S&P 500 ETF’s (SPY) 4.9% gains. With continuous innovation in artificial intelligence (AI) and machine learning (ML), the cloud industry is expected to continue growing. According to a Fortune Business Insights report, the global cloud computing market is expected to grow at a 17.9% CAGR between 2021 – 2028.
So, we think it could be wise to bet on the shares of established cloud-based companies Veeva Systems Inc. (VEEV), Teradata Corporation (TDC), and Brightcove Inc. (BCOV). They each have the potential to capitalize on the industry’s growth.
Veeva Systems Inc. (VEEV)
VEEV provides cloud-based software solutions for the life sciences industry. Its offerings include Veeva Commercial Cloud, a suite of software, data, and analytics solutions; and Veeva Vault, a cloud-based enterprise content and data management application for managing commercial functions. VEEV is based in Pleasanton, Calif.
VEEV completed the acquisition of Learnaboutgmp today. Learnaboutgmp is a leading provider of accredited GxP training for life sciences. The company’s senior director of Vault Training, Kent Malmros, said, “By bringing together industry-leading learning technology and content, we aim to help customers drive more strategic training programs that improve job competency and compliance.”
The company’s revenue surged 29% year-over-year to $433.60 million for its fiscal first quarter ended April 30, 2021. Its non-GAAP operating income grew 40% year-over-year to $181.40 million, while its non-GAAP net income increased 40% year-over-year to $146.90 million. VEEV’s non-GAAP EPS came in at $0.91, up 37.9% year-over-year.
Analysts expect VEEV’s EPS and revenue to increase 18.4% and 24.4%, respectively, year-over-year to $3.48 and $1.82 billion in its fiscal year 2022. In addition, it surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 25.8% to close yesterday’s trading session at $332.78.
VEEV’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Quality, and a B grade for Growth and Sentiment. Within the Medical – Services industry, VEEV is ranked #20 of 81 stocks. To see the additional POWR Ratings for VEEV (Stability, Value, and Momentum), click here.
Teradata Corporation (TDC)
San Diego, California-based Hybrid cloud analytics software provider TDC’s solutions and services comprise software, hardware, and related business consulting and support services. It offers Teradata Vantage primarily, which is an analytics platform. The company serves various industries, such as financial services, government, retail, and telecommunications.
On May 4, 2021, TDC announced a set of enhancements for Teradata Vantage on Alphabet Inc.’s (GOOGL) Google Cloud, making it easier for its consumers to use the services. This move could drive increasing demand for the company’s services in the near term.
TDC’s revenue surged 13% year-over-year to $491 million for the first quarter, ended March 31, 2021. Its non-GAAP operating income grew 259% year-over-year to $115 million, while its non-GAAP net income increased 160% year-over-year to $78 million. Its non-GAAP EPS came in at $0.69, up 155.5% year-over-year.
TDC’s EPS and revenue are expected to increase 20.6% and 3.9%, respectively, year-over-year to $1.58 and $1.91 billion in its fiscal year 2021. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 165.8% to close yesterday’s trading session at $49.95.
It’s no surprise that TDC has an overall A rating, which equates to Buy in our POWR Ratings system. In addition, the stock has an A grade for Growth and Value, and a B grade for Quality.
Brightcove Inc. (BCOV)
BCOV provides cloud-based services for video. Its flagship product includes Video Cloud, an online video platform that enables its customers to publish and distribute video to Internet-connected devices. The Boston-based company also offers Brightcove Beacon, an application that allows companies to launch over-the-top video experiences on mobile, web, and smart and connected TVs.
BCOV established a partnership with global e-commerce giant Alibaba Group Holding Limited (BABA) on May 25, 2021, creating the Brightcove China Delivery via Alibaba Cloud solution. This move made BCOV the first video provider to enable on-demand video streaming in China. Namita Dhallan, BCOV’s Chief Product Officer, said, “We are opening the country for business for our customers securely and reliably.”
The company’s revenue surged 7% year-over-year to $51.50 million for the second quarter, ended June 30, 2021. BCOV’s non-GAAP gross profit grew 22% year-over-year to $115 million. Its non-GAAP net income increased 55.2% year-over-year to $4.50 million. Its non-GAAP EPS came in at $0.11, up 57.1% year-over-year.
BCOV’s EPS is expected to increase 33.3% year-over-year to $0.48 in its fiscal year 2021. It surpassed consensus EPS estimates in each of the trailing four quarters. Its revenue is expected to increase 10.6% year-over-year to $237.72 million in its fiscal year 2022. The stock has gained 8.9% over the past year to close yesterday’s trading session at $11.52.
BCOV’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. In addition, it has an A grade for Value, and a B grade for Quality and Sentiment.
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VEEV shares were trading at $336.45 per share on Tuesday afternoon, up $3.67 (+1.10%). Year-to-date, VEEV has gained 23.58%, versus a 18.36% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...
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