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Customer churn drags Veeva (VEEV.US) shares lower; Baird reassures market: Financial impact is manageable, maintains "Outperform" rating

Market IntelThursday, Dec 12, 2024 2:40 am ET

1min read

A senior executive at Veeva Systems (VEEV.US), a global life sciences industry cloud solutions provider, said a customer defecting to Salesforce (CRM.US) led to the stock falling about 5% on Wednesday, and also prompted analyst reaction.Veeva and Salesforce both develop customer relationship management (CRM) software for enterprise clients.Veeva's strategic execution VP Paul Shawah said at a Raymond James event: "We do want to win the vast majority of clients, but we certainly don't expect to win every single one. In fact, we just recently realized that one client was not on the same path as us. They're going to work with Salesforce - they're going to do a custom service."Shawah added that it would be a very long project that would take some time to complete. "It might not be good for Salesforce. They haven't even launched the product yet."Shawah noted that they don't think most of the big clients will go the custom route, and the company will continue to win the vast majority of clients.Shawah commented: "We may have an opportunity to win back this client. So we focus on bringing success to our clients, and things like this happen."Shawah said the company just saw a commitment from its fourth top 20 client, and is in discussions with the remaining top 20 clients.Baird analysts weighed in.Baird maintains a "buy" rating on Veeva. The analyst said Veeva still believes it will retain the vast majority of clients, and investors largely believe this development is possible or inevitable.Analysts added that they still believe the financial impact is manageable."While 'custom' can be interpreted in many ways, we don't dismiss entities like Salesforce, but the historical record of customers choosing to go this route is ultimately mixed," the analysts said.The firm's analysts noted that this is expected to be a long project, and Veeva's management noted that "a lot can happen between now and then," and there is a possibility of winning back this client in the future.

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