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Investing.com - Stephens lowered its price target on Simulations Plus (NASDAQ:SLP) to $20.00 from $28.00 on Tuesday, while maintaining an Overweight rating on the stock. The company’s shares, currently trading at $17.47, have declined nearly 37% year-to-date and are hovering near their 52-week low of $16.72. According to InvestingPro data, the stock’s RSI suggests it’s in oversold territory.
The firm’s decision follows Simulations Plus reporting quarterly financial results that were slightly better than the negative preliminary results announced in mid-June. Despite the modest improvement, the company faces multiple macroeconomic challenges affecting its business performance. Nevertheless, InvestingPro analysis shows the company maintains strong financial health with a current ratio of 4.37 and operates with moderate debt levels.
Simulations Plus maintained its revenue guidance but slightly lowered its adjusted EBITDA outlook, which Stephens noted was below their previous model. The company cited several factors impacting its second-half performance, including client mergers and a contract cancellation resulting from a negative data readout that halted two programs.
The firm observed that demand for Simulations Plus services has weakened, though clients continue to spend on software. Client headcount growth, previously a positive factor, is no longer providing momentum for the business.
Stephens indicated that the fourth-quarter outlook likely represents conservatism rather than deteriorating fundamentals, with management expressing confidence in setting expectations for growth in fiscal year 2026.
In other recent news, Simulations Plus reported fiscal third-quarter 2025 revenue of $20.4 million, marking a 10% year-over-year increase but falling short of the $21.84 million consensus estimate. The company posted adjusted earnings per share of $0.45, significantly surpassing analyst projections of $0.25. Despite a net loss of $67.3 million due to a one-time non-cash impairment charge, adjusted EBITDA reached $7.4 million, a 37% increase from the previous year. Simulations Plus maintained its fiscal 2025 revenue guidance, projecting growth between 9-14%, and provided adjusted EPS guidance of $0.93-$1.06. Meanwhile, KeyBanc downgraded the company from Overweight to Sector Weight, citing challenges in the biopharma market and customer concentration issues. In contrast, BTIG maintained a Buy rating with a $25.00 price target, acknowledging industry headwinds but highlighting positive long-term prospects. Additionally, Simulations Plus invested $1 million in Nurocor, a clinical trial technology firm, to support innovation in the pharmaceutical industry. This strategic move aligns with the company’s broader goal of expanding its market reach and complementing its organic growth.
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