Veeva Systems saw its shares rally sharply in premarket trading Friday, rising 10.6% to $172.70 after S&P Dow Jones Indices disclosed that the life sciences cloud software company will be added to the S&P 500 next week.
The index provider said Veeva will take the place of Coterra Energy in the benchmark, with the change effective Thursday, May 7. The adjustment to the S&P 500 follows Coterra's pending acquisition by Devon Energy, a transaction the announcement described as expected to close soon.
Market mechanics commonly drive a bump in stock price for firms named to the S&P 500. Index-tracking funds must buy shares of companies newly admitted to the benchmark to align their portfolios with the index composition, which frequently supports upward pressure on the added stock.
Company-level metrics remain unchanged by the index decision. Veeva, based in Pleasanton, California, has about 163.3 million shares outstanding, which translates to an approximate market capitalization of $25 billion. The premarket move followed a period in which Veeva's shares had declined roughly 30% year to date before Friday's gains.
The replacement reflects corporate activity in the energy sector meeting index rules. Coterra Energy's removal stems from its acquisition by shale producer Devon Energy; the deal is cited as expected to close soon, prompting the vacancy Veeva will fill in the S&P 500 lineup.
Summary of the situation
- Veeva Systems will join the S&P 500 on Thursday, May 7, replacing Coterra Energy.
- The stock rose 10.6% in premarket trading to $172.70 after the announcement.
- Veeva has approximately 163.3 million shares outstanding and a market cap of about $25 billion; the shares had fallen about 30% year to date before Friday.