Updates for Synopsys, Crowdstrike, and Veeva

Q3 reports continue to trickle in from stocks we are keeping an eye on. I wanted to update you briefly on the recent reports from Synopsys, Crowdstrike, and Veeva Systems.

Synopsys (SNPS)

Synopsys, our semiconductor electronic design automation software provider, had a very strong quarter, with revenue up 25% year over year and fiscal year sales coming in 15% higher than 2022. We've seen several indications that the semiconductor space is coming out of its post-COVID lull, and this is just another positive data point. Synopsys is well positioned, with strong market share, AI-driven design tools, and an unmatched semiconductor IP portfolio. While the company is going through a CEO transition, their 2024 guidance was also right on our modeling.

The market has been pretty far off my estimation of fair value for Synopsys. Even after incorporating results and guidance, and giving the company a bit more credit for out year revenue growth, the stock still looks substantially overvalued. I'm bumping the fair value price up pretty significantly, from $290 to $321, but the shares still trade more than 65% above that at present.

Crowdstrike (CRWD)

Our very first Green Dot pick performed outstandingly in its first year, up 73% since recommendation, smoking the market by over 57%. And that's even with a 35% drop at one point! Crowdstrike is a good example of why you need a strong sense of a company's value to make good investing decisions (i.e. buy, sell, or hold).

Q3 was another strong quarter. Revenue grew 35% year-over-year. With a year-end annual recurring revenue run rate of over $3 billion, it is now the largest pure play cybersecurity software vendor in history. Cash profitability continues to be dynamite, with a 35% free cash margin. Module adoption rates continue to hold steady, with over 63% of the firm's customers using 5 or more of Crowdstrike's security modules (it has 22 on offer).

At this point, Crowdstrike's business looks as strong as ever, but the stock has caught up to the business value. I've upped the fair value target ever so slightly to $228 (from $227). With a current share price over $240, the stock is a clear "hold" at this point in time.

Veeva Systems (VEEV)

Watch List stock Veeva Systems, a data management and customer relationship software suite for life sciences firms, reported its Q3 recently. Revenues grew 12%, but we've mentioned before that a contract change earlier in 2023 shifted the timing of some revenue in 2024. As a result, revenue growth for '23 will look below norms, but '24 could come in above. In the long term it's a minor effect on business value.

The company continues to develop and roll out new products. Veeva Data Cloud is the firm's offering for migrating legacy data into an interoperable system, with applications like Compass (prescriber and patient data) and Link (medical provider data) built on top. Veeva Development Cloud is used to store and analyze clinical data for the drug development process. Veeva announced 13 new brands using Compass, two new top 20 biopharmas joining Link, and 24 customer wins for Development cloud in the quarter.

Overall, Veeva is tracking pretty close to the course we set for it, and I'm holding the fair value price at $175.