Veeva Systems faces increasing competition from Salesforce: Morgan Stanley

Veeva Systems (NYSE:VEEV), a cloud-based software provider for the science and healthcare industries, faces increasing competition from Salesforce (NYSE:CRM), according to Morgan Stanley.

“Salesforce is a credible threat in CRM, posing risk of share loss in 25%-30% of Veeva’s business and weighing on the stock’s multiple,” said Morgan Stanley analysts, led by Craig Hettenbach.

Salesforce showcased its new offering Agentforce earlier this month at Dreamforce. Agentforce’s artificial intelligence agents demonstrated use cases in an array of industries, including health care and the sciences.

“System integrators had a notable presence at Dreamforce, leading to increased conjecture that top 20 global pharma companies are looking to issue RFPs for Life Sciences CRM,” Hettenbech noted.

However, Veeva has a reputation as a high-quality company and holds a leadership role in the Live Sciences vertical. It also invests about 50% of its revenue into research and development projects. And the balance sheet shows no debt and $5B in cash.

However, its lack of an AI narrative compared to other software companies has raised concerns among some investors, according to Morgan Stanley.

Morgan Stanley rates Veeva at Underweight with a price target of $173, which is well below its current value of $211.

Veeva has a Strong Buy rating from Seeking Alpha analysts and a Buy rating from Wall Street analysts. It has a Hold rating from Seeking Alpha’s Quant system.