Simulations Plus (SLP) AI Stock Analysis

• Market Cap: $547.42M
• Dividend Yield: 0.88%
• Average Volume (3M): 287.30K
• Price to Earnings (P/E): 76.2
• Beta (1Y): 1.06
• Revenue Growth: 21.49%
• EPS Growth: -31.23%
• Country: US
• Employees: 243
• Sector: Healthcare
• Sector Strength: 44
• Industry: Medical - Healthcare Information Services
• EPS (TTM): 0.31
• Shares Outstanding: 20,111,046
• 10 Day Avg. Volume: 303,529
• 30 Day Avg. Volume: 287,296
• PEG Ratio: -4.63
• Price to Book (P/B): 5.25
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 50.80
• Enterprise Value/Market Cap: 2.12
• Enterprise Value/Revenue: 4.01
• Enterprise Value/Gross Profit: 26.77
• Enterprise Value/Ebitda: 27.15
• 1Y Price Target: $48.67
• Price Target Upside: 84.08% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6

• Rating: 70 Outperform
• Price Target: $29.00 ▲(9.68%Upside)

Simulations Plus demonstrates solid financial performance, particularly in revenue growth and balance sheet strength. However, technical analysis indicates bearish signals, and the company's valuation suggests it may be overvalued. The earnings call reinforces growth potential, but challenges in project initiation and margin compression pose risks.

Positive Factors

Financial Performance

Simulations Plus reported revenue of $22.4 million, outperforming estimates due to better-than-expected software and service sales.

Restructuring Benefits

The streamlined structure is expected to allow for a more robust sales and marketing team across both software and services, further improvement to cross-selling opportunities, and greater agility in rolling out product updates and improvements.

Revenue Growth Projections

Management reaffirmed its fiscal 2025 guidance, projecting revenue growth of 28.5% to 32.8% year-over-year.

Negative Factors

Investor Concerns

The restructuring announcement led to investor concerns about the timing of the cuts and the potential implications for the company’s demand outlook.

Macro Uncertainty

There are concerns over the visibility of service bookings converting as expected due to macro uncertainty in the biopharma space.

Service Revenue Challenges

Service revenue declined 9% year over year on an organic basis due to client-driven data delays.

Simulations Plus Business Overview & Revenue Model

Company Description

Simulations Plus, Inc. develops drug discovery and development software for modeling and simulation, and prediction of molecular properties utilizing artificial intelligence and machine learning based technology worldwide. It operates through four segments: Simulations Plus, Cognigen, DILIsym, and Lixoft. The company offers GastroPlus, which simulates the absorption and drug interaction of compounds administered to humans and animals; and DDDPlus and MembranePlus simulation products. It also provides products based on mechanistic and mathematical models, such as DILIsym, a quantitative systems pharmacology software; NAFLDsym; IPFsym; RENAsym; and MITOsym. In addition, the company provides Absorption, Distribution, Metabolism, Excretion, and Toxicity Predictor for chemistry-based computer program that takes molecular structures as inputs and predicts their properties; and MedChem Designer, as well as modeling and simulation products comprising MonolixSuite and PKPlus. Further, it provides population modeling and simulation contract research services; training and consulting services designed to accelerate pharmacometrics studies; and clinical-pharmacology-based consulting services in support of regulatory submissions. The company serves pharmaceutical, biotechnology, agrochemical, cosmetics, and food companies, as well as academic and regulatory agencies. Simulations Plus, Inc. was incorporated in 1996 and is headquartered in Lancaster, California.

How the Company Makes Money

Simulations Plus generates revenue primarily through the sale of its software licenses and the provision of consulting services. The company offers various licensing models, including perpetual licenses, annual licenses, and subscriptions, allowing clients to choose the model that best fits their needs. In addition to software sales, Simulations Plus provides customized consulting services to support clients in addressing specific scientific challenges, which forms a significant part of its revenue. Partnerships with pharmaceutical companies, research institutions, and regulatory agencies enhance its market reach and contribute to its earnings. The company also benefits from recurring revenue streams through software maintenance and support contracts, providing ongoing customer support and software updates.

Simulations Plus Financial Statement Overview

Summary

Simulations Plus exhibits solid financial health with strong revenue growth and robust balance sheet metrics, characterized by low leverage and high equity ratio. Despite a slight decline in net profit margins and free cash flow, the company demonstrates efficient cash management and operational efficiency, positioning it well for future growth.

Income Statement

Simulations Plus shows strong revenue growth with a TTM revenue of $78.56 million, up from $70.01 million annually, indicating a positive trend. The gross profit margin is solid at approximately 55.26%, though net profit margin declined from 14.22% to 9.19% over the TTM, possibly due to increased operational costs. The EBIT and EBITDA margins remain healthy at 4.54% and 8.96% respectively, demonstrating operational efficiency.

Balance Sheet

The company maintains a robust financial position with a low debt-to-equity ratio of approximately 0.0042, reflecting minimal leverage. The equity ratio is very strong at around 94.12%, suggesting high asset backing by equity. ROE stands at a solid 3.81% in the TTM, though it has declined from 5.46% annually, indicating slightly reduced profitability per unit of equity.

Cash Flow

Operating cash flow to net income ratio is strong at 1.63, indicating efficient cash conversion. Free cash flow decreased from $12.75 million to $9.91 million, reflecting a decline in free cash flow growth, potentially due to increased capital investments. The free cash flow to net income ratio remains healthy at 1.37, underscoring good cash management.

Breakdown
TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement		Total Revenue
78.56M	70.01M	59.58M	53.91M	46.47M	41.59M
	Gross Profit
43.43M	43.15M	47.95M	43.08M	35.87M	30.94M
	EBIT
3.57M	6.13M	8.72M	11.34M	7.86M	8.89M
	EBITDA
9.31M	11.80M	12.56M	18.48M	14.70M	11.85M
	Net Income Common Stockholders
7.22M	9.95M	9.96M	12.48M	9.78M	9.33M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
21.39M	20.25M	115.46M	128.24M	123.60M	116.01M
	Total Assets
201.43M	196.64M	186.10M	188.38M	179.98M	168.42M
	Total Debt
796.00K	1.01M	1.20M	1.40M	1.28M	926.78K
	Net Debt
-10.20M	-9.30M	-56.33M	-50.16M	-35.71M	-48.28M
	Total Liabilities
11.88M	14.21M	16.07M	10.13M	14.20M	12.39M
	Stockholders Equity
189.55M	182.43M	170.03M	178.25M	165.78M	156.04M
Cash Flow		Free Cash Flow
9.91M	12.75M	17.58M	13.93M	14.63M	8.33M
	Operating Cash Flow
11.74M	13.32M	21.86M	17.90M	19.20M	10.91M
	Investing Cash Flow
-32.04M	-53.97M	7.37M	4.30M	-26.74M	-75.51M
	Financing Cash Flow
-5.74M	-6.57M	-23.27M	-7.62M	-4.68M	102.37M

Simulations Plus Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 26.44
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SLP, the sentiment is Negative. The current price of 26.44 is below the 20-day moving average (MA) of 30.00, below the 50-day MA of 30.49, and below the 200-day MA of 30.80, indicating a bearish trend. The MACD of -1.16 indicates Positive momentum. The RSI at 34.41 is Neutral, neither overbought nor oversold. The STOCH value of 18.62 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SLP.

Simulations Plus 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%
Sector *	54 Neutral	$5.38B	3.40	-45.06%	3.28%	16.75%	-0.02%
SOPH	53 Neutral	$199.82M	―	-60.75%	―	4.66%	11.33%

Simulations Plus Corporate Events

Simulations Plus Announces Q3 Revenue and Strategic Changes

On June 11, 2025, Simulations Plus announced preliminary revenue figures for its third fiscal quarter, expecting between $19 million and $20 million, and updated its full-year revenue guidance to range between $76 million and $80 million. The company is facing market uncertainties impacting its pharmaceutical and biotech clients, leading to budget cuts and project delays. In response, Simulations Plus has reorganized its operations to a functionally driven model and made key leadership appointments to enhance client engagement and sales capabilities, aiming for long-term growth and operational efficiency.

The most recent analyst rating on (SLP) stock is a Buy with a $56.00 price target. To see the full list of analyst forecasts on Simulations Plus stock, see the SLP Stock Forecast page.

Simulations Plus Restructures Operations and Leadership

On May 30, 2025, Simulations Plus, Inc. announced a restructuring of its operations, which included reducing its workforce by approximately 10%, or 23 employees, to enhance operational efficiency and reduce expenses. This restructuring is expected to incur charges of about $0.7 million but aims to save approximately $4.3 million annually. Additionally, the company made significant leadership changes, including appointing John DiBella as Chief Revenue Officer, while other executives assumed new roles to support the company’s strategic goals.

The most recent analyst rating on (SLP) stock is a Buy with a $56.00 price target. To see the full list of analyst forecasts on Simulations Plus stock, see the SLP Stock Forecast page.

Simulations Plus Reports Strong Q2 2025 Revenue Growth

On April 3, 2025, Simulations Plus reported its financial results for the second quarter of fiscal 2025, which ended on February 28, 2025. The company experienced a 23% increase in total revenue, reaching $22.4 million, with software revenue rising by 16% and services revenue by 34%. Despite a decrease in net income and diluted EPS compared to the previous year, the company maintained its full-year revenue guidance of $90 to $93 million and adjusted diluted EPS of $1.07 to $1.20. The strong performance was driven by significant growth in its Quantitative Systems Pharmacology business unit and robust services revenue, particularly in Medical Communications. Simulations Plus is optimistic about maintaining its momentum into the second half of 2025, despite challenges in the biopharma funding environment.