Bhavan Suri, Analyst at William Blair & Company, says he thinks there is significant opportunity for Veeva Systems Inc’s (VEEV) Vault product. He says the product generates about $60 million in revenue and is growing at about 100%, with just 4% penetration. As such, he says the company’s overall growth rate of 30% is sustainable.
“We just did a proprietary survey of 110 pharmaceutical companies; 4% of those use Veeva’s Vault, the Vault product specifically,” Suri says. “So we’re talking about low penetration; further, 52% of those companies surveyed plan on moving to a cloud-based solution for that functionality in the next 12 months. And the only cloud-based solution in that market is Veeva Vault, and so that’s a positive trend we feel for that product.”
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In addition, Suri says that at 29%, Veeva has one of the highest operating margins in the cloud business. At current market cap of $3.5 billion and growing at 30%, Suri says Veeva could be a $1 billion company in four years.
“If you’d applied a 40% free cash flow conversion, it would yield about $400 million in free cash flow; at a 20 multiple would mean around an $8 billion market cap,” he says. “So we like it.”
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