It’s been a deadly year for equity investors, with the S&P 500 having fallen more than 16% since the start of the year. The Fed’s hawkish stance to rein in soaring inflation and the aftermath of the Ukraine-Russia war has prompted a massive tech sell-off in recent weeks. Despite Friday’s 4% relief rally, the tech-heavy Nasdaq is down more than 25% year-to-date.
According to Bank of America strategists Michael Hartnett, during last week’s sharp stock market selloff, tech stocks suffered their biggest pullback of the year, with investors pulling $1.1 billion out of the sector. However, the growing need for enterprise software for recording and managing customer experience, increasing demand for e-commerce from various industries, and increasing enterprise IT budgets may help the software market. business to grow significantly in the short term. The global enterprise software market is expected to grow at a pace CAGR of 6.46% to $84.94 billion by 2027.
As a result, we believe fundamentally healthy enterprise software stocks Workday, Inc. (WDAY) and Veeva Systems Inc. (VEEV) could be solid bets at their current price levels.
Click here to view our Software Industry Report for 2022
Workday, Inc. (WDAY)
Based in Pleasanton, CA, WDAY provides enterprise cloud applications globally. Its applications help its customers plan, execute, analyze, extend to other applications and environments, and manage their businesses and operations.
During the first quarter, ending January 31, 2022, WDAY’s total revenue increased 21.6% year-on-year to $1.38 billion. It is not GAAP compliant operating result rose 12.4% from its value a year ago at $237.14 million, while its non-GAAP net income improved 11.6% from its L quarter. previous year to $205.97 million. The company’s non-GAAP EPS rose 6.9% year-over-year to $0.78.
The consensus EPS estimate of $4.62 for its fiscal year ending Jan. 31, 2023 represents 28.3% year-over-year growth. Analysts expect revenue to grow 21.3% year-over-year to $1.43 billion for the first quarter ending April 2022. Additionally, it has an impressive track record of earnings surprises as it has exceeded consensus EPS estimates in each of the past four quarters. The stock has fallen 35.6% since the start of the year.
WDAY’s POWR Rankings reflect this promising prospect. The company has an overall rating of B, which translates to Buy in our proprietary rating system. POWR ratings rate stocks on 118 separate factors, each with its own weighting.
The stock also has an A rating for growth and a B rating for sentiment and quality. Within the Software app industry, it is ranked No. 32 out of 157 stocks. To see additional POWR ratings for value, stability, and momentum for WDAY, Click here.
Veeva Systems Inc. (VEEV)
VEEV is a provider of cloud-based software solutions for the global life sciences industry. The Company’s cloud solutions for the life sciences industry are grouped into two product lines: Veeva Commercial Cloud, a suite of software, data and analytics solutions; and Veeva Vault. Veev is based in Pleasanton, California.
This month, VEEV announced that Lucid Diagnostics Inc. (LUCD), a commercial-stage cancer prevention medical diagnostics company and a majority-owned subsidiary of PAVmed Inc. (VAP), has selected Veeva Vault CDMS to provide electronic data capture (EDC), coding and data cleaning in their upcoming study for EsoGuard in patients undergoing standard screening and management for Barrett’s esophagus or esophageal adenocarcinoma.
Additionally, this month, VEEV announced that AmplifyBio is building a foundation for advanced quality, study execution, and reporting with Veeva Vault Quality Suite. With the help of a modern quality system with integrated industry best practices, the company will simplify and automate processes to increase the efficiency of its preclinical drug testing.
VEEV’s total revenue increased 22.4% year-over-year to $485.50 million for the fourth quarter, ending January 31, 2022. Its non-GAAP operating profit was increased 21.6% from its prior year value to $186.25 million, while its non-GAAP net income improved 16.5% from the 2019 quarter. previous year to reach $146.95 million. The company’s EPS rose 15.4% year-over-year to $0.90.
Analysts expect VEEV’s revenue to grow 14.4% year-over-year to $495.88 million in the first quarter, ending April 2022. The company’s EPS is expected increase 1.3% year on year to $0.92 in the first quarter, ending April 30. 2022. Plus, it has an impressive history of earnings surprises; it has exceeded consensus EPS estimates for the past four quarters. Shares of the company are down 36.5% year-to-date.
It’s no surprise that VEEV has an overall rating of B, which equates to Buy in our POWR rating system. VEEV has an A rating for quality and a B rating for growth. In the Medical services industry, it is ranked No. 23 out of 83 stocks. Click here to see additional POWR ratings for VEEV (Stability, Sentiment, Momentum and Value).
Note that VEEV is one of the few stocks hand-picked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.
Click here to view our 2022 Healthcare Sector Report
Shares of WDAY remained unchanged in after-hours trading on Tuesday. Year-to-date, WDAY is down -36.55%, compared to a -13.76% rise in the benchmark S&P 500 over the same period.
About the Author: Spandan Khandelwal
Spandan’s is a financial journalist and investment analyst specializing in the stock market. Through its ability to interpret financial data, it aims to help investors assess a company’s fundamentals before investing. After…