Veeva Systems Inc.

VEEV Details

Veeva Systems Inc. (NYSE: VEEV) offers cloud-based software solutions for the global life sciences industry. Its range of services includes multichannel customer relationship management, regulated content and information management, master and customer data management for clients ranging from small, emerging biotechnology companies to departments of global pharmaceutical manufacturers. In Q1FY22 (ended April 30, 2021), North America accounted for 56.81% of VEEV's total revenue.

Improving Training and Compliance Through Acquisition: On August 03, 2021, VEEV announced the acquisition of Learnaboutgmp, a leading eLearning provider that delivers GxP training for life sciences. The acquisition is aimed to assist clients in developing strategic training programs to improve the skill set of their employees and fulfil their compliance needs.

Partnership to Foster Seamless Document Verification: On July 06, 2021, VEEV announced a collaboration with GlobalVision, a document inspection software company. This alliance will enable the shared customer base of both companies to run thorough inspections on documents within the Veeva Vault. This integration facilitates the detection of errors, reduction in the number of revisions, and minimizes cycle time, thus helping customers market their products faster.

Q1FY22 Results: The company reported a growth of 28.62% in total revenue to USD 433.57 million in Q1FY22 compared to USD 337.11 million in Q1FY21, owing to a 26.23% YoY improvement in its Subscription Services segment, which represented 78.68% of the total revenue in Q1FY22, and a 38.26% YoY growth in the Professional Services & Other segment. VEEV reported a 46.69% improvement in operating income to USD 128.45 million in Q1FY22 vs. USD 87.57 million in Q1FY21. Net income rose to USD 115.57 million in Q1FY22 from USD 86.57 million in Q1FY21. As of April 30, 2021, VEEV's cash balance (including short-term investments) was USD 2.15 billion, and financial lease obligations amounted to USD 96 thousand.

Key Risks: VEEV's top 10 customers accounted for 36% of its total revenues in FY21 (ended January 31, 2021). The loss of any of these key customers could hurt the company's financials. In addition, it faces direct competition from established players like IQVIA, Oracle Corporation, and others in the cloud-based solutions services industry. Any advanced innovation or superior product development by its competitors could impact its operations.

Outlook: As of Q1FY22, VEEV expects to clock revenue in the range of USD 450 - 452 million in Q2FY22, with non-GAAP operating income ranging between USD 175 - 177 million. Non-GAAP EPS for Q2FY22 is estimated to be USD 0.85 - 0.86. For FY22, VEEV anticipates generating USD 1.815 - 1.825 billion in revenues, with a non-GAAP operating income of USD 710 million. The estimated FY22 non-GAAP EPS is USD 3.49.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

 (Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

VEEV Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: VEEV's stock price has increased by 30.00% and 18.33% in the past three and six months, respectively, and is currently close to the higher end of the 52-week range of USD 235.74 to USD 338.69. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 70.97. We have valued the stock using the Price/Earnings Per Share Value-based relative valuation methodology and arrived at a target price of USD 325.93. Considering the significant increase in the stock price, we believe the current price adequately reflects the decent fundamentals and recommend a "Sell" rating on the stock at the current price of USD 338.48, up 0.13% as of August 04, 2021, at 12:06 PM ET.

* All forecasted figures and Industry Information have been taken from REFINITIV.

* The reference data in this report has been partly sourced from REFINITIV.

Safehold Inc.

SAFE Details

Safehold Inc. (NYSE: SAFE) is in the business of acquiring, managing and capitalizing ground leases. Ground leases are lengthy contracts (ranging from 30 to 99 years) between a property owner (the company) and a leaseholder or tenant. For federal income tax purposes in the United States, the company is taxed as a real estate investment trust (REIT). SAFE's portfolio of properties is diversified by property type and region and comprises ground leases and a master lease (relating to five hotel assets).

Stepping Down of CFO: On May 7, 2021, the firm stated that Jeremy Fox-Geen, its CFO, resigned from his post in the company as well as iStar Inc., Safehold's manager, to join a cryptocurrency infrastructure company in June 2021. SAFE is managed by its largest stakeholder, iStar, which provides its shareholders with safe, rising income and long-term capital appreciation.

6MFY21 Results: SAFE reported a 13.16% rise in total revenues to USD 87.72 million during 6MFY21 (ended June 30, 2021) compared to USD 77.52 million during 6MFY20, due to an increase in interest income from sales-type leases. In addition, the company reported an increase in net income to USD 31.74 million during 6MFY21 vs. USD 29.96 million during 6MFY20. As of June 30, 2021, its balance sheet stood with cash and cash equivalents of USD 33.95 million, with a total debt of USD 1.90 billion. The company declared a quarterly dividend of USD 0.17 per share, paid on July 15, 2021, to shareholders of record on June 30, 2021.

Key Risks: For FY20 and FY19, SAFE's hotel business accounted for 15.2% and 15.0%, respectively, of its total revenue, and the COVID-19 pandemic had a tremendous influence on this segment. The company's revenue stream could be severely harmed if the pandemic continues.

Further, as of December 31, 2021, iStar held a 65.4% stake in the company. While the companies have agreed to a stockholders' agreement that limits iStar's voting power to 41.9%, with additional agreed-upon standstill measures. This concentration of ownership and voting power can limit its minority shareholders' ability to influence corporate matters.

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

SAFE Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: SAFE stock price has surged by 82.58% in the past twelve months and created a fresh 52-week high earlier today. The stock is currently trading far above its 50 and 200 DMA levels, and its RSI Index is at 72.76. We have valued the stock using the Price/Earnings Per Share Value-based relative valuation methodology and arrived at a target price of USD 75.82. Considering the significant upsurge in the stock price, we believe the current price sufficiently reflects the decent fundamentals. Hence, we recommend a "Sell" rating on the stock at the current price of USD 91.60, up 0.35% as of August 04, 2021, 11:53 AM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.