BTIG cuts Simulations Plus price target to $41, maintains Buy

On Thursday, BTIG analysts adjusted their outlook on Simulations Plus (NASDAQ:SLP), reducing the price target to $41.00 from the previous $50.00 while maintaining a Buy rating on the stock. The revision follows the company’s financial results for the second quarter of fiscal year 2025, which were released on the same day. Currently trading near its 52-week low of $23.01, InvestingPro data shows the stock is in oversold territory, with multiple indicators suggesting potential undervaluation relative to its Fair Value.

Simulations Plus reported a revenue of $22.4 million, marking a 22.5% year-over-year increase and surpassing both BTIG’s and consensus estimates, which stood at $22 million and $21.9 million, respectively. This performance aligns with the company’s strong revenue growth trajectory, which InvestingPro data shows at 19.84% over the last twelve months. However, the company’s adjusted EBITDA of $6.6 million represented a 7.8% decline from the previous year, falling short of the $7.4 million and $7.1 million estimates by BTIG and consensus. Despite these mixed results, the company maintains robust financial health with a current ratio of 4.15, indicating strong liquidity.

The revenue beat was attributed to the Services division, which generated $8.9 million, up 34% year-over-year and exceeding expectations of $8.0 million. The Software (ETR:SOWGn) revenue slightly missed expectations, coming in at $13.5 million compared to the anticipated $13.9 million, although it still represented a solid 16% year-over-year growth. The organic software growth was noted to be positive at 8% year-over-year.

The company pointed out a delayed GastroPlus renewal, worth approximately $500,000, which impacted the quarter’s figures. If not for this delay, Simulations Plus would have met both the consensus EBITDA estimate and BTIG’s Software revenue forecast for the quarter. Despite the delay, the company highlighted strong Services bookings and a 13% year-over-year increase in backlog.

Management at Simulations Plus reaffirmed the full-year 2025 guidance, with expectations for sequential improvements in both revenue and EBITDA in the third and fourth quarters. On the earnings call, it was noted that tariffs could contribute to a cautious environment in the bio-pharma industry, potentially causing delays in the initiation of service projects. However, the company does not anticipate a reduction in revenue from these challenges, and a cautious stance is not a new trend for the industry. With a market capitalization of $478.5 million and trading at a P/E ratio of 59.51, investors seeking deeper insights into SLP’s valuation and growth prospects can access comprehensive analysis through the Pro Research Report, available exclusively on InvestingPro.

In other recent news, Simulations Plus reported strong financial results for the first quarter of 2025, with revenue reaching $22.4 million, marking a 23% increase year-over-year. This figure exceeded analysts’ expectations, which had projected $21.92 million. The company also surpassed earnings per share (EPS) forecasts, reporting $0.31 against a predicted $0.26. Despite this positive performance, the company’s adjusted EBITDA fell to $6.6 million, a decline from the previous year, attributed to higher research and development and sales and marketing expenses. Citizens JMP analyst Constantine Davides maintained a Market Perform rating on Simulations Plus, reflecting a neutral stance on the stock’s market performance. The company’s software segment showed significant growth, with a 16% increase in software revenue and an 81% gross margin. Simulations Plus also reaffirmed its fiscal year 2025 guidance, projecting total revenue between $90 million and $93 million, highlighting confidence in its strategic initiatives.

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