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Certara (CERT)
NASDAQ:CERT
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Certara (CERT) AI Stock Analysis

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CERT

Certara

(NASDAQ:CERT)

Rating:68Neutral
Price Target:
$11.50
▲(12.41%Upside)
Certara's overall stock score is driven by strong financial performance, particularly in cash flow management and balance sheet stability. The positive sentiment from the latest earnings call, highlighting revenue growth and strategic initiatives, boosts confidence. However, the stock is weighed down by poor technical indicators and a concerning valuation due to negative profitability.
Positive Factors
Customer interest
Certara is seeing increased customer interest, which could drive future revenue growth.
Regulatory developments
Certara is benefiting from FDA's updated guidance and sector AI/biosimulation trends, which are expected to drive continued growth.
Negative Factors
Customer spending
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.
Demand challenges
Demand trends for the company’s core biosimulation business remain challenged.

Certara (CERT) vs. SPDR S&P 500 ETF (SPY)

Certara Business Overview & Revenue Model

Company DescriptionCertara, 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 MoneyCertara 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 Earnings Call Summary

Earnings Call Date:May 05, 2025
(Q1-2025)
|
% Change Since: -19.95%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Positive
The earnings call presented a generally positive outlook for Certara, driven by strong revenue and bookings growth, the launch of new software versions, and the FDA's announcement favoring their product offerings. While market headwinds and specific segment softness were noted, the company's strategic initiatives and new opportunities seemed to outweigh the challenges.
Q1-2025 Updates
Positive Updates
Strong Revenue and Bookings Growth
Certara reported first quarter revenue of $106 million, representing a 10% growth compared to Q1 2024. Bookings reached $118.2 million, a 12% increase from the previous year.
Significant Software Segment Performance
Software revenue for Q1 2025 was $46.4 million, an 18% increase from the prior year, with software bookings growing by 23%. Chemaxon contributed $5.9 million to software revenue.
FDA Announcement on Animal Testing Phase-Out
The FDA's announcement to phase out animal testing has led to significant interest in Certara's Non-Animal Navigator solution, which leverages AI and modeling to replace animal testing in drug development.
Launch of Simcyp Simulator Version 24
Certara announced the 24th version of its Simcyp Simulator, featuring new drug interaction libraries and enhanced modeling capabilities. Simcyp has supported over 120 FDA-approved novel drug applications.
Share Repurchase Program
Certara announced a $100 million share repurchase authorization, with approximately $25 million repurchased to date, reflecting confidence in the company's long-term growth strategies.
Adjusted EBITDA Growth
Adjusted EBITDA for Q1 2025 was $34.8 million, up from $29.1 million in Q1 2024, with a margin of 33%.
Negative Updates
Continued Market Headwinds
Certara faces headwinds from IRA price controls, an erratic capital raising environment for biotechs, and potential new trade and healthcare policies.
Softness in Tier 1 Biosimulation Services
There was noted softness in the Tier 1 customer base for biosimulation services, impacting growth in that segment.
Lower Software Net Retention Ratio
The software net retention ratio was reported at 102%, below the historical average, due to expected timing of software revenue achievement.
Company Guidance
During Certara's First Quarter 2025 Earnings Conference Call, significant guidance was provided detailing the company's financial performance and future outlook. Certara reported first-quarter revenue of $106 million, reflecting a 10% increase from the same period in 2024. Bookings for the quarter were $118.2 million, up 12% year-over-year, with software bookings growing by 23% and services bookings by 7%. Chemaxon significantly contributed $5.9 million to revenue and $4.9 million to bookings. The guidance for the full year anticipates total revenue between $415 million and $425 million, with Chemaxon expected to contribute $23 million to $25 million. Adjusted EBITDA margins are projected to be between 30% and 32%, with adjusted EPS in the range of $0.42 to $0.46. Certara emphasized strategic investments in AI integration and biosimulation model development, particularly in response to the FDA's recent move to phase out animal testing, which is expected to positively impact the company's future growth trajectory.

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.
Income Statement
75
Positive
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
80
Positive
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
85
Very Positive
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.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue385.15M354.34M335.64M286.10M243.53M
Gross Profit230.63M213.31M203.07M174.49M142.76M
EBITDA72.37M23.84M89.00M58.58M17.87M
Net Income-12.05M-55.36M14.73M-13.27M-49.40M
Balance Sheet
Total Assets1.58B1.56B1.57B1.51B1.27B
Cash, Cash Equivalents and Short-Term Investments179.18M234.95M236.59M185.80M271.38M
Total Debt311.90M302.57M308.11M303.02M299.37M
Total Liabilities516.45M516.30M493.26M469.88M447.27M
Stockholders Equity1.06B1.05B1.08B1.04B822.13M
Cash Flow
Free Cash Flow78.84M67.43M80.01M51.49M36.87M
Operating Cash Flow80.47M82.75M92.54M60.39M44.81M
Investing Cash Flow-112.37M-79.55M-27.84M-269.92M-8.61M
Financing Cash Flow-21.01M-9.45M-7.36M123.39M208.21M

Certara Technical Analysis

Technical Analysis Sentiment
Negative
Last Price10.23
Price Trends
50DMA
11.14
Negative
100DMA
11.44
Negative
200DMA
11.54
Negative
Market Momentum
MACD
-0.17
Negative
RSI
39.33
Neutral
STOCH
45.70
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CERT, the sentiment is Negative. The current price of 10.23 is below the 20-day moving average (MA) of 10.87, below the 50-day MA of 11.14, and below the 200-day MA of 11.54, indicating a bearish trend. The MACD of -0.17 indicates Negative momentum. The RSI at 39.33 is Neutral, neither overbought nor oversold. The STOCH value of 45.70 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CERT.

Certara Risk Analysis

Certara disclosed 42 risk factors in its most recent earnings report. Certara reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Certara Peers Comparison

Overall Rating
UnderperformOutperform
Sector (55)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
70
Outperform
$1.39B65.361.73%3.00%
68
Neutral
$1.73B-0.25%9.37%95.72%
68
Neutral
$1.61B-15.97%16.29%66.01%
58
Neutral
$1.10B-10.99%10.24%2.63%
58
Neutral
$1.55B-43.33%22.29%-32.89%
56
Neutral
$271.11M47.47-41.49%1.78%20.01%-750.59%
55
Neutral
€4.88B16.22-48.29%2.17%15.33%-7.46%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CERT
Certara
9.84
-5.80
-37.08%
OMCL
Omnicell
31.01
-7.84
-20.18%
SLP
Simulations Plus
13.06
-26.93
-67.34%
EVH
Evolent Health
10.05
-12.39
-55.21%
PHR
Phreesia
26.96
2.35
9.55%
SDGR
Schrodinger
20.33
-2.27
-10.04%

Certara Corporate Events

Executive/Board ChangesShareholder Meetings
Certara Holds Annual Stockholders Meeting on May 21
Neutral
May 22, 2025

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.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 30, 2025