KeyBanc downgrades Simulations Plus stock rating on biopharma challenges
Investing.com
Published Jul 15, 2025 01:40AM ET
Investing.com - KeyBanc downgraded Simulations Plus (NASDAQ:SLP) from Overweight to Sector Weight following the company's fiscal third-quarter results and forward outlook. The stock, currently trading near its 52-week low of $16.72, has declined nearly 59% over the past year.
The downgrade reflects ongoing challenges in the biopharma end market environment, which KeyBanc believes affects Simulations Plus more severely due to its customer concentration and biotech exposure. InvestingPro data shows 4 analysts have recently revised their earnings estimates downward, suggesting broader market concerns.
KeyBanc noted that Simulations Plus reported $2 million in cancellations from a single biotech customer, highlighting the vulnerability of the company's revenue stream in the current market conditions.
Despite previous optimism that the recent Proficiency acquisition could help organic revenue growth re-accelerate to high-single digits in fiscal year 2026, KeyBanc now sees weaker customer demand continuing in the near-to-mid-term with no recovery expected in biotech end markets.
KeyBanc sharply lowered its estimates for Simulations Plus and reduced its valuation target multiple, citing difficulties in underwriting multiple expansion and estimate re-acceleration given the current risks and uncertainties.
In other recent news, Simulations Plus reported third-quarter fiscal 2025 earnings that surpassed analyst expectations. The company announced adjusted earnings per share of $0.45, significantly beating the projected $0.25. However, revenue for the quarter was $20.4 million, which fell short of the $21.84 million consensus estimate, despite showing a 10% year-over-year increase. The company also reported a net loss of $67.3 million due to a one-time non-cash impairment charge of $77.2 million. Simulations Plus has updated its fiscal 2025 guidance, forecasting revenue between $76 million and $80 million, and adjusted earnings per share of $0.93-$1.06. In another development, the company invested $1 million in Nurocor, a firm specializing in cloud-based clinical trial optimization software. This investment is part of Simulations Plus' strategy to support early-stage technology companies in the pharmaceutical sector. The company has also transitioned to a functionally-driven operating model to streamline operations and focus on growth opportunities.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
Get The News You Want
Written By: Investing.com
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.