Certara (CERT) AI Stock Analysis

• Market Cap: $1.75B
• Dividend Yield: N/A
• Average Volume (3M): 1.49M
• Price to Earnings (P/E): 220.0
• Beta (1Y): 1.35
• Revenue Growth: 11.61%
• EPS Growth: N/A
• Country: US
• Employees: 1,487
• Sector: Healthcare
• Sector Strength: 47
• Industry: Medical - Healthcare Information Services
• EPS (TTM): 0.07
• Shares Outstanding: 160,623,580
• 10 Day Avg. Volume: 1,145,663
• 30 Day Avg. Volume: 1,486,888
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.16
• Enterprise Value/Revenue: 5.00
• Enterprise Value/Gross Profit: 8.67
• Enterprise Value/Ebitda: 41.00
• 1Y Price Target: $14.50
• Price Target Upside: 33.39% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 65 Neutral
• Price Target: $11.50 ▲(5.80% Upside)

Certara's overall stock score is driven by strong financial performance and positive earnings call sentiment, highlighting robust revenue growth and strategic advancements. However, the high P/E ratio suggests overvaluation, and technical indicators point to mixed momentum, balancing the score.

Positive Factors

Financial Performance

There was strong 15% services bookings growth supported by uptake across all customer sizes.

Growth Potential

Increased adoption bolstered by new launches/version updates for high-value offerings could drive meaningful upside to CERT's valuation while offsetting any exposure to sector-wide spending uncertainties.

Regulatory Approval

Certara's PBPK modeling platform became the first and only software to receive European Medicines Agency qualification.

Negative Factors

End Market Weakness

End market weakness was evident in tier 2 software bookings and tier 1 services bookings performance in the quarter.

Market Demand Challenges

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

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 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	405.75M	385.15M	354.34M	335.64M	286.10M	243.53M
Gross Profit	233.91M	230.63M	213.31M	203.07M	174.49M	142.76M
EBITDA	49.47M	72.37M	23.84M	89.00M	58.58M	17.87M
Net Income	7.98M	-12.05M	-55.36M	14.73M	-13.27M	-49.40M
Balance Sheet
Total Assets	1.54B	1.58B	1.56B	1.57B	1.51B	1.27B
Cash, Cash Equivalents and Short-Term Investments	162.27M	179.18M	234.95M	236.59M	185.80M	271.38M
Total Debt	307.86M	311.90M	302.57M	308.11M	303.02M	299.37M
Total Liabilities	472.87M	516.45M	516.30M	493.26M	469.88M	447.27M
Stockholders Equity	1.07B	1.06B	1.05B	1.08B	1.04B	822.13M
Cash Flow
Free Cash Flow	103.67M	78.84M	67.43M	80.01M	51.49M	36.87M
Operating Cash Flow	101.55M	80.47M	82.75M	92.54M	60.39M	44.81M
Investing Cash Flow	-115.41M	-112.37M	-79.55M	-27.84M	-269.92M	-8.61M
Financing Cash Flow	-51.60M	-21.01M	-9.45M	-7.36M	123.39M	208.21M

Certara Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 10.87
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• 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 Neutral. The current price of 10.87 is above the 20-day moving average (MA) of 10.65, above the 50-day MA of 10.80, and below the 200-day MA of 11.52, indicating a neutral trend. The MACD of 0.07 indicates Negative momentum. The RSI at 51.83 is Neutral, neither overbought nor oversold. The STOCH value of 30.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CERT.

Certara Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PHR	71 Outperform	$1.83B	―	-15.97%	―	16.29%	66.01%
OMCL	66 Neutral	$1.50B	66.33	1.87%	―	6.39%	―
CERT	65 Neutral	$1.75B	220.04	0.76%	―	11.61%	―
SLP	60 Neutral	$281.18M	47.47	-41.49%	0.43%	20.01%	-750.59%
EVH	55 Neutral	$1.09B	―	-13.38%	―	-6.71%	-71.40%
Sector *	51 Neutral	$7.83B	-0.18	-40.10%	2.29%	21.46%	-2.03%
SDGR	50 Neutral	$1.45B	―	-44.40%	―	18.59%	10.96%

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.