Certara Analyst Maintains Hold Rating Amid Mixed Financial Performance and Strategic Developments

In a report released on May 7, Joseph Vruwink from Robert W. Baird maintained a Hold rating on Certara (CERT – Research Report), with a price target of $19.00.

Joseph Vruwink has given his Hold rating due to a combination of factors affecting Certara’s performance and outlook. Certara, a biosimulation software provider, showed a revenue increase of 7% year-over-year in the first quarter of 2024, which was slightly above expectations. However, the company also experienced a decrease in total bookings by 6% compared to the previous year, with a particularly noticeable decline in service bookings. While software bookings improved, this was offset by the fall in services, and the EBITDA margin shrank from the previous year, mainly due to the costs associated with mergers and acquisitions as well as increased investments in sales, research and development, and artificial intelligence.
Even with these mixed results, Vruwink noted some positive internal developments at Certara, such as the promising launch of Certara Cloud and a reorganization in their go-to-market strategy which may enhance services performance. The company has maintained its full-year guidance, expecting revenue growth and a gradual improvement in EBITDA margins, particularly in the second half of the year. Nevertheless, the current sentiment and customer engagements have not yet fully translated into increased bookings, prompting Vruwink to maintain a Neutral stance while keeping an eye on potential future improvements that could warrant a more positive rating.

In another report released on May 8, Barclays also maintained a Hold rating on the stock with a $18.00 price target.

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Certara (CERT) Company Description:

Certara Inc accelerate medicines to patients using biosimulation software and technology to transform traditional drug discovery and development. It provides proven modeling and simulation, regulatory science, and assessment software and services to help clients reduce clinical trial, accelerate regulatory approval and increase patient access to medicines.