Stephens has adjusted its price target for Simulations Plus (SLP, Financial), lowering it from $28 to $20, although it maintains an Overweight rating on the stock. The company recently released quarterly results that exceeded expectations, but its adjusted EBITDA guidance came in slightly below Stephens' projections. The outlook for the fourth quarter suggests a cautious approach, reflecting prudence rather than a deterioration in fundamental performance. Stephens perceives minimal risk of further downside from the current position.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 4 analysts, the average target price for Simulations Plus Inc (SLP, Financial) is $28.50 with a high estimate of $36.00 and a low estimate of $25.00. The average target implies an upside of 63.14% from the current price of $17.47. More detailed estimate data can be found on the Simulations Plus Inc (SLP) Forecast page.
Based on the consensus recommendation from 6 brokerage firms, Simulations Plus Inc's (SLP, Financial) average brokerage recommendation is currently 1.7, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Simulations Plus Inc (SLP, Financial) in one year is $65.63, suggesting a upside of 275.67% from the current price of $17.47. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Simulations Plus Inc (SLP) Summary page.
SLP Key Business Developments
Release Date: July 14, 2025
- Revenue: Increased 10% to $20.4 million, including a $2.4 million contribution from the Pro-ficiency acquisition.
- Organic Revenue: Declined 4% due to lower QSP, QST software revenue, and a decrease in biosimulation services revenue.
- Diluted EPS Loss: $3.35, including a $77.2 million noncash impairment expense.
- Adjusted Diluted EPS: $0.45 compared to $0.27 last year.
- Adjusted EBITDA: $7.4 million or 37% of revenue, compared to $5.6 million or 30% of revenue last year.
- Software Revenue Growth: 6% in the quarter.
- Services Revenue Growth: 17% in the third quarter.
- Gross Margin: Total gross margin was 64%, with software gross margin at 80% and services gross margin at 38%.
- Backlog: Ended the quarter with a backlog of $20.7 million, up from $20.4 million in the second quarter and $15.7 million year over year.
- Cash and Short-term Investments: $28.5 million with no debt.
- Revised Fiscal Year 2025 Revenue Guidance: $76 million to $80 million, with Pro-ficiency contributing $9 million to $12 million.
- Adjusted EBITDA Margin Guidance: Between 23% and 27% for fiscal year 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Simulations Plus Inc (SLP, Financial) reported a 10% increase in third-quarter revenue to $20.4 million, including a $2.4 million contribution from the Pro-ficiency acquisition.
- Adjusted diluted EPS increased to $0.45 from $0.27 last year, indicating improved profitability.
- The company's software revenue grew by 6%, driven by the ADMET Predictor solution and modest growth in GastroPlus and MonolixSuite platforms.
- Simulations Plus Inc (SLP) has implemented a strategic reorganization to enhance client engagement and elevate sales and marketing capabilities.
- The company is rolling out new AI-driven initiatives across its product suite, including AI-enhanced GastroPlus, which is expected to augment users' modeling workflows with intelligent guidance and real-time predictive analytics.
Negative Points
- Organic revenue declined by 4% due to lower QSP, QST software revenue, and a decrease in biosimulation services revenue.
- The company reported a diluted EPS loss of $3.35, including a $77.2 million noncash impairment expense related to prior acquisitions.
- Services revenue was significantly impacted by cost constraints implemented by clients, leading to a slowdown in bookings and project delays.
- The renewal rates for software customers dropped, with fees renewal rate falling from 93% to 84% and accounts renewal rate from 86% to 71%.
- Simulations Plus Inc (SLP) experienced a significant client cancellation during the quarter, impacting near-term revenues by approximately $2 million.
