Certara (CERT) AI Stock Analysis

• Market Cap: $1.95B
• Dividend Yield: N/A
• Average Volume (3M): 1.65M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.21
• Revenue Growth: 9.37%
• EPS Growth: 95.72%
• Country: US
• Employees: 1,487
• Sector: Healthcare
• Sector Strength: 44
• Industry: Medical - Healthcare Information Services
• EPS (TTM): 0.14
• Shares Outstanding: 162,233,830
• 10 Day Avg. Volume: 1,258,948
• 30 Day Avg. Volume: 1,645,491
• PEG Ratio: -0.83
• Price to Book (P/B): 2.34
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 31.51
• Enterprise Value/Market Cap: 1.33
• Enterprise Value/Revenue: 1.71
• Enterprise Value/Gross Profit: 11.55
• Enterprise Value/Ebitda: 24.54
• 1Y Price Target: $14.64
• Price Target Upside: 22.10% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9

• Rating: 74 Outperform
• Price Target: $13.50 ▲(12.59%Upside)

The overall score reflects strong revenue growth and a positive strategic outlook from the earnings call, bolstered by effective cash flow management and a solid balance sheet. However, the stock faces challenges in profitability, as reflected in its valuation metrics, and technical indicators suggest cautious short-term sentiment.

Positive Factors

Client Interest

Certara is seeing increased customer interest, which could drive future revenue growth.

Regulatory Changes

The recent FDA announcement to gradually reduce animal testing in favor of new approach methodologies, including in silico tools and AI/ML, may positively impact Certara's opportunity set.

Negative Factors

Demand Trends

Demand trends for the company’s core biosimulation business remain challenged.

Market Conditions

Certara continues to grapple with cautious customer spending dynamics caused by a number of macro headwinds, including the downstream effects of IRA price controls, an erratic capital-raising environment for biotechs, and the potential for new trade and healthcare policies from the current administration.

Certara Business Overview & Revenue Model

Company Description

Certara (CERT) is a leading provider of biosimulation software and technology-enabled services that accelerate drug discovery and development. Operating within the healthcare and life sciences sectors, Certara offers a comprehensive suite of solutions designed to optimize and streamline the drug development process. The company's core products and services include modeling and simulation software, regulatory science consulting, and clinical pharmacology services, which help pharmaceutical companies and regulatory agencies make data-driven decisions.

How the Company Makes Money

Certara primarily makes money through the sale of software licenses and the provision of consulting services. Its revenue model includes licensing fees for its biosimulation software platforms, which are utilized by pharmaceutical and biotechnology companies to predict drug behavior and efficacy. Additionally, Certara generates significant income from its consulting services, where it offers expert advice and strategic insights to optimize drug development pipelines. The company also engages in long-term contracts and partnerships with major pharmaceutical firms and regulatory bodies, further stabilizing and enhancing its revenue streams. Key revenue streams include software licensing, consultancy fees, and long-term strategic partnerships, which collectively contribute to Certara's financial performance.

Certara Financial Statement Overview

Summary

Certara demonstrates strong revenue growth and efficient cash flow management, with a solid balance sheet characterized by low leverage. However, profitability remains a concern with negative net income impacting return on equity. Continued focus on improving margins and addressing profitability challenges could enhance financial health further.

Income Statement

The company exhibits steady revenue growth with a TTM (Trailing-Twelve-Months) revenue increase of 2.43% compared to the previous year. Gross profit margin has remained strong at 56.9%, indicating effective cost management. However, the net profit margin is negative at -0.66%, reflecting challenges in achieving profitability. The EBIT and EBITDA margins are 3.35% and 7.48% respectively, showing improvement in operational efficiency compared to past negative EBIT figures.

Balance Sheet

Certara maintains a solid balance sheet with a debt-to-equity ratio of 0.01, indicating low leverage and financial risk. The equity ratio stands at 69.45%, reflecting a strong equity base relative to total assets. However, the return on equity is negative at -0.24%, suggesting profitability issues that need addressing.

Cash Flow

The cash flow position is robust with a free cash flow of $89.45 million, showcasing a healthy cash generation capability. The operating cash flow to net income ratio is high at 35.63, highlighting efficient cash conversion despite net losses. Free cash flow to net income ratio is substantial, demonstrating strong cash flow relative to net income.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
394.50M	385.15M	354.34M	335.64M	286.10M	243.53M
	Gross Profit
224.52M	230.63M	213.31M	203.07M	174.49M	142.76M
	EBIT
13.20M	-1.73M	-40.77M	32.52M	13.58M	-24.89M
	EBITDA
29.51M	72.37M	23.84M	89.00M	58.58M	17.87M
	Net Income Common Stockholders
-2.63M	-12.05M	-55.36M	14.73M	-13.27M	-49.40M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
179.09M	179.18M	234.95M	236.59M	185.80M	271.38M
	Total Assets
1.56B	1.58B	1.56B	1.57B	1.51B	1.27B
	Total Debt
12.83M	311.90M	302.57M	308.11M	303.02M	299.37M
	Net Debt
-166.25M	132.71M	67.62M	71.52M	117.22M	27.99M
	Total Liabilities
476.73M	516.45M	516.30M	493.26M	469.88M	447.27M
	Stockholders Equity
1.08B	1.06B	1.05B	1.08B	1.04B	822.13M
Cash Flow		Free Cash Flow
89.45M	78.84M	67.43M	80.01M	51.49M	36.87M
	Operating Cash Flow
93.52M	80.47M	82.75M	92.54M	60.39M	44.81M
	Investing Cash Flow
-114.56M	-112.37M	-79.55M	-27.84M	-269.92M	-8.61M
	Financing Cash Flow
-24.66M	-21.01M	-9.45M	-7.36M	123.39M	208.21M

Certara Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 11.99
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 11.99 is above the 20-day moving average (MA) of 11.61, below the 50-day MA of 12.05, and above the 200-day MA of 11.63, indicating a bullish trend. The MACD of -0.06 indicates Negative momentum. The RSI at 55.45 is Neutral, neither overbought nor oversold. The STOCH value of 78.16 is Neutral, 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
CERT	74 Outperform	$1.95B	―	-0.25%	―	9.37%	95.72%
SLP	70 Outperform	$547.42M	76.18	3.96%	0.88%	21.49%	-31.23%
OMCL	67 Neutral	$1.46B	66.88	1.73%	―	3.00%	―
SDGR	61 Neutral	$1.92B	―	-43.33%	―	22.29%	-32.89%
PHR	58 Neutral	$1.67B	―	-15.97%	―	16.29%	66.01%
EVH	54 Neutral	$1.05B	―	-10.99%	―	10.24%	2.63%
Sector *	54 Neutral	$5.38B	3.40	-45.06%	3.28%	16.75%	-0.02%

Certara Corporate Events

Certara Holds Annual Stockholders Meeting on May 21

On May 21, 2025, Certara, Inc. held its annual stockholders meeting, where several key proposals were voted on. The stockholders elected four Class II directors to the board, ratified the selection of RSM US LLP as the independent auditor for 2025, and approved the executive compensation on a non-binding advisory basis. These decisions are crucial for Certara’s governance and operational strategies, potentially impacting its market positioning and stakeholder confidence.

The most recent analyst rating on (CERT) stock is a Hold with a $14.50 price target. To see the full list of analyst forecasts on Certara stock, see the CERT Stock Forecast page.