Certara (CERT) AI Stock Analysis

• Market Cap: $2.29B
• Dividend Yield: N/A
• Average Volume (3M): 2.26M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.35
• Revenue Growth: 8.70%
• EPS Growth: 78.31%
• Country: US
• Employees: 1,487
• Sector: Healthcare
• Sector Strength: 69
• Industry: Medical - Healthcare Information Services
• EPS (TTM): -0.07
• Shares Outstanding: 161,475,710
• 10 Day Avg. Volume: 3,545,251
• 30 Day Avg. Volume: 2,262,627
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 4.49
• Price to Cash Flow (P/CF): 8.80
• P/FCF Ratio: 9.90
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $14.56
• Price Target Upside: 0.97% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 10

Certara's overall stock score is driven by strong financial stability and impressive technical momentum. Despite ongoing profitability challenges, the company's strategic investments and revenue growth provide a positive outlook. Valuation concerns, due to negative earnings, are offset by long-term growth potential from software expansion and AI integration.

Positive Factors

Financial Performance

Certara preannounced results with revenue and adjusted EBITDA ahead of expectations.

Market Position

Certara's biosimulation portfolio of software & services provides significant cost & time savings for leading biopharma players.

Product Innovation

Certara unveiled a new solution to help drug developers transition to using more biosimulation in preclinical safety testing, aligning with the FDA's roadmap.

Negative Factors

End-Market Challenges

Certara continues to be a key player in the biosimulation space, but the end-market has not cooperated, seemingly affected by IRA concerns and a choppy funding environment.

Regulatory Services Segment

The strategic evaluation of the regulatory services business is ongoing, indicating uncertainty in that segment.

Revenue Performance

Expected revenue of $106.0 million came in below target, driven by lower-than-expected software sales.

Certara Business Overview & Revenue Model

Company Description

Certara, Inc. provides software products and technology-enabled services to customers for biosimulation in drug discovery, preclinical and clinical research, regulatory submissions, and market access. It offers medicines to patients using biosimulation software, technology, and services to transform drug discovery and development. The company also provides related technology-enabled services to guide its customers' new drugs through the regulatory submission process and into the market. Its technology-enabled services include mechanistic biosimulation, empirical biosimulation, drug development and regulatory strategy, clinical pharmacology, model-based meta-analysis, regulatory writing and medical communications, regulatory operations, and market access. Further, company offers software, comprising mechanistic biosimulation platform, empirical PK/PD biosimulation platform, data standardization and compliance software, scientific informatics platform, clinical outcomes databases for biosimulation, authoring and management of regulatory submissions platform, and market access communication platform. The company serves biopharmaceutical companies, and academic and government institutions. It has operations in the United States, Canada, Spain, Luxembourg, Portugal, the United Kingdom, Germany, France, the Netherlands, Denmark, Switzerland, Italy, Poland, Japan, the Philippines, India, Australia, and China. Certara Inc. was founded in 2008 and is headquartered in Princeton, New Jersey.

How the Company Makes Money

Certara generates revenue through the sale of its biosimulation software licenses, which are used by pharmaceutical and biotechnology companies to enhance drug development processes. The company also earns income from consulting services, where its team of experts provide strategic insights and technical support to optimize drug discovery and regulatory submissions. Additionally, Certara benefits from partnerships and collaborations with leading life sciences companies and regulatory agencies, which further bolster its revenue streams. The combination of software licensing, consulting services, and strategic partnerships forms the backbone of Certara's revenue model.

Certara Financial Statement Overview

Summary

Certara exhibits strong revenue growth and a stable balance sheet with minimal debt. While cash flow is positive and improving, the company's profitability remains a significant concern with continued net losses impacting overall financial health. Operational efficiency improvements are essential for achieving sustainable profitability.

Income Statement

Certara has shown consistent revenue growth with a 8.7% increase from 2023 to 2024, and a gross profit margin remaining strong at approximately 59.9%. However, the company struggles with profitability, reflected in a negative net profit margin of -3.1% owing to persistent net losses. Despite improvements, negative EBIT and EBITDA margins highlight ongoing operational challenges.

Balance Sheet

The company's balance sheet is robust with a low debt-to-equity ratio of 0.01, indicating minimal reliance on debt financing. The equity ratio stands at 67.2%, showcasing strong financial stability. However, return on equity remains negative due to net losses, which is a concern for long-term profitability.

Cash Flow

Certara's cash flow is healthy, with a positive operating cash flow higher than net income, indicating good cash generation. Free cash flow growth is strong at 16.9% from 2023 to 2024, demonstrating efficient capital expenditure management. However, the free cash flow to net income ratio is skewed due to negative net income.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
385.15M	354.34M	335.64M	286.10M	243.53M
	Gross Profit
230.63M	213.31M	203.07M	174.49M	142.76M
	EBIT
-1.73M	-40.77M	32.52M	13.58M	-24.89M
	EBITDA
-36.71M	23.84M	89.00M	58.58M	17.87M
	Net Income Common Stockholders
-12.05M	-55.36M	14.73M	-13.27M	-49.40M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
179.18M	234.95M	236.59M	185.80M	271.38M
	Total Assets
1.58B	1.56B	1.57B	1.51B	1.27B
	Total Debt
14.17M	302.57M	308.11M	303.02M	299.37M
	Net Debt
-165.02M	67.62M	71.52M	117.22M	27.99M
	Total Liabilities
516.45M	516.30M	493.26M	469.88M	447.27M
	Stockholders Equity
1.06B	1.05B	1.08B	1.04B	822.13M
Cash Flow		Free Cash Flow
78.84M	67.43M	80.01M	51.49M	36.87M
	Operating Cash Flow
80.47M	82.75M	92.54M	60.39M	44.81M
	Investing Cash Flow
-112.37M	-79.55M	-27.84M	-269.92M	-8.61M
	Financing Cash Flow
-21.01M	-9.45M	-7.36M	123.39M	208.21M

Certara Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 14.42
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CERT, the sentiment is Positive. The current price of 14.42 is above the 20-day moving average (MA) of 11.72, above the 50-day MA of 11.83, and above the 200-day MA of 12.02, indicating a bullish trend. The MACD of 0.94 indicates Negative momentum. The RSI at 69.32 is Neutral, neither overbought nor oversold. The STOCH value of 85.01 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CERT.

Certara Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SLP	77 Outperform	$721.58M	100.42	3.96%	0.68%	21.49%	-31.23%
CERT	76 Outperform	$2.29B	―	-1.14%	―	8.70%	78.31%
OMCL	61 Neutral	$1.46B	118.99	1.03%	―	-3.04%	―
PHR	58 Neutral	$1.40B	―	-22.67%	―	17.83%	59.64%
Sector *	51 Neutral	$5.32B	3.32	-40.25%	2.90%	17.93%	2.14%
EVH	51 Neutral	$1.06B	―	-5.96%	―	30.09%	36.14%
SDGR	50 Neutral	$1.90B	―	-38.58%	―	-4.21%	-544.81%

Certara Corporate Events

Certara Announces Leadership Change with Dr. Smith’s Departure

On March 5, 2025, Certara, Inc. announced that Dr. Patrick F. Smith, who served as President of Certara Drug Development Solutions, stepped down from his role on March 3, 2025. Despite this change, Dr. Smith will continue to contribute to the company in a senior advisory and scientific capacity, indicating a strategic shift in his responsibilities while maintaining his involvement with Certara.