Simulations Plus: Further Downside Is Likely (Rating Downgrade)

  • Simulations Plus' Q3 FY25 results missed expectations, with revenue guidance cut sharply due to biopharma market weakness and services segment volatility. Organic growth continues to decelerate and the company's margins are under pressure. This situation is likely to persist, while the demand environment is soft. Simulations Plus' revenue multiple remains high, given its dependence on services and reliance on M&A to drive growth. As a result, further downside appears likely.