Nucor earnings beat by $0.08, revenue fell short of estimates
Stephens lowered its price target on Simulations Plus (NASDAQ:SLP) stock to $28 from $42 Thursday, while maintaining an Overweight rating following the company’s preliminary third-quarter results and reduced guidance. According to InvestingPro data, the stock is currently trading at a P/E ratio of 91.76, though technical indicators suggest the stock may be oversold.
The biosimulation company announced preliminary third-quarter fiscal 2025 revenue results showing a 14% decline compared to analyst expectations and significantly decreased its full-year 2025 revenue guidance by 15% from prior forecasts, implying fourth-quarter revenue will fall 34% below Wall Street estimates. InvestingPro analysis reveals that 7 analysts have recently revised their earnings expectations downward, with the next earnings report due on July 9, 2025.
Stephens noted the revenue miss and guidance reduction were largely anticipated after Simulations Plus announced restructuring and leadership changes last week, but warned shares would face pressure due to concerning end-market commentary that cited budget reductions and project cancellations "more pronounced than what we have experienced over the past two years."
The investment firm now estimates a 9% decline in organic revenue for fiscal year 2025, driven by sharp deceleration in the latter half of the fiscal year, and expects a "disproportionate impact on profits" with only modest offsets from lower variable costs and one quarter of benefit from restructuring.
Despite these challenges, Stephens maintained its Overweight rating, citing a product mix shifting back toward more than 60% software, potential return to 30%+ EBITDA margins, and FDA support for biosimulation as positive factors for the company’s outlook. InvestingPro data shows the company maintains strong financial health with a current ratio of 4.37 and operates with moderate debt levels. Discover 10+ additional exclusive ProTips and comprehensive analysis in the Pro Research Report, available with an InvestingPro subscription.
In other recent news, Simulations Plus has adjusted its fiscal 2025 revenue guidance, projecting third-quarter revenue between $19 million and $20 million, with full-year revenue expected between $76 million and $80 million. This revision is attributed to market uncertainties impacting its pharmaceutical and biotech clients. The company also announced a series of leadership changes and a restructuring plan aimed at enhancing operational efficiency, which includes a workforce reduction affecting approximately 10% of its full-time staff. Simulations Plus launched DILIsym 11, a new version of its quantitative systems toxicology software, introducing features for predicting drug-induced liver injury in pediatric populations. Additionally, the company appointed Grant Thornton LLP as its new auditor following a competitive selection process. BTIG analysts have revised their price target for Simulations Plus to $41 while maintaining a Buy rating, following the company’s second-quarter fiscal 2025 financial results. The company reported a 22.5% year-over-year increase in revenue to $22.4 million, surpassing estimates, although its adjusted EBITDA of $6.6 million fell short of expectations. Despite a delayed GastroPlus renewal affecting quarterly figures, Simulations Plus remains optimistic about sequential improvements in revenue and EBITDA for the remainder of the year.
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