CERT - Certara downgraded at Jefferies on growth headwinds

2023-08-22 12:07:22 ET

Certara ( NASDAQ: CERT ) traded lower on Tuesday after Jefferies downgraded the stock to Hold from Buy, citing a lower likelihood of growth for the health tech company in 2024.

The downgrade comes after Certara ( CERT ) CFO John Gallagher painted a negative near-term outlook for the company at an investor conference organized by the firm.

"We continue to believe in the shift to biosimulation. It's just not happening as quickly as we'd envisioned," analyst David Windley wrote, referring to a key area of CERT's business focus.

Citing macro concerns about healthcare spending. Windley says that a scenario where a rise in software demand at the year-end could lead to a more robust software outlook for 2024 could be "optimistic."

Assuming a rise in non-renewals/ cancellations, he indicates a bearish narrative for CERT and argues that the rival health tech Simulations Plus ( SLP ), with its Q3 FY23 results, also flagged "several non-renewals from smaller biotechs."

Windley says that while CERT's margin and cash flow characteristics are favorable to contract research organizations, they do not support the company's 2x multiple. Jefferies slashed its price target to $17.00 from $24.50.

More on Certara

• Certara Inc. ( CERT ) Q2 2023 Earnings Call Transcript
• Certara Faces Slowing 2023 Growth Trajectory
• Certara downgraded at Barclays on valuation
• Certara hits 7-month high on joining S&P SmallCap 600
• Certara stock surges ~15% as Wall Street cheers "solid beats" in Q4, positive outlook
• Seeking Alpha’s Quant Rating on Certara

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