What happened
A recommendation downgrade was the catalyst behind Veeva Systems's (VEEV -2.69%) sub-par performance on the stock market Wednesday. Following the chop, Veeva's stock ended the day almost 3% lower, which was notably worse than the essentially flat trajectory of the S&P 500 index.
So what
The downgrade was from white-shoe investment bank Morgan Stanley in the person of prognosticator Craig Hettenbach. He now feels Veeva is deserving only of an underweight (read: sell) tag; prior to that, he had rated it as equalweight (hold). Hettenbach's price target on the shares is $181 apiece.
In a new note, the analyst expressed concern about looming competition from a heavyweight competitor in the customer relationship management (CRM) space. He wrote that "We expect Veeva's lock on the Life Sciences CRM market to be tested by Salesforce, representing the most formidable threat yet."
"If Salesforce enters the market, we see 5% or more potential loss in revenue for Veeva, a risk that's not captured in the stock's premium valuation," he added.
Veeva is a next-generation provider of cloud-computing services for healthcare companies. As it functions at the intersection of two growing fields, at times it has posted impressive growth numbers over the years.
NYSE: VEEV
Key Data Points
Now what
As is often the case with pundits, professional opinions differ on Veeva's prospects. In fact, recently the trend has been for analysts to become more bullish on the company's future, rather than less.
Earlier this month, following a solid and estimates-beating first-quarter earnings report, a clutch of them raised their price targets on the stock (albeit marginally, in several cases). One typical raiser was Raymond James' Brian Peterson, who uppped his level to $210 per share from the preceding $200 while maintaining his company's equivalent of a buy recommendation.
