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Investing.com - TD Cowen initiated coverage on Simulations Plus (NASDAQ:SLP) with a Hold rating and a $16.00 price target on Tuesday. The company maintains a GOOD financial health score according to InvestingPro data, with strong liquidity and more cash than debt on its balance sheet.
The research firm cited the company’s competitive biosimulation platform that provides significant cost and time savings for biopharmaceutical customers as a positive factor in its analysis.
TD Cowen expressed a constructive outlook for Simulations Plus’s software revenue growth potential, which represents one segment of the company’s business model.
The firm noted concerns about a customer spending slowdown in the company’s consulting services division, which it described as "looming large" in its assessment of the stock’s prospects.
TD Cowen also indicated that synergies from the company’s restructuring initiatives will take time to materialize, supporting its Hold rating and $16 price target, which reflects a 3.7x enterprise value to fiscal year 2026 sales multiple that aligns with industry peers.
In other recent news, Simulations Plus reported its fiscal third-quarter 2025 earnings, revealing a revenue of $20.4 million, which marked a 9.8% year-over-year increase. This figure surpassed both BTIG and consensus estimates, which had anticipated $20.1 million, and exceeded the preliminary revenue expectation range of $19 million to $20 million. The company achieved an adjusted EBITDA of $7.4 million, reflecting a 33% year-over-year growth, surpassing expectations from BTIG and consensus. Meanwhile, the company dismissed Grant Thornton LLP as its independent auditor, appointing Rose, Snyder & Jacobs to ensure timely completion of its quarterly report.
Additionally, Simulations Plus announced a 70% success rate in its AI-driven drug design collaboration with the Institute of Medical Biology of the Polish Academy of Sciences. Stephens lowered its price target for Simulations Plus to $20.00 from $28.00, citing macroeconomic challenges, although it maintained an Overweight rating. BTIG retained a Buy rating with a $25.00 price target, while Citizens JMP reiterated a Market Perform rating following the earnings report. These developments highlight the company’s ongoing efforts and challenges in the current economic landscape.
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