Simulations Plus (SLP) Stock Forecast & Price Target

Simulations Plus Inc. reported total revenue of $20.4 million in F3Q, aligning closely with consensus estimates and exceeding its guidance range, indicative of strong operational performance within its primary software segment. The company anticipates a potential re-acceleration of organic revenue growth towards high-single digits in FY26, driven by the recent Proficiency acquisition, which could offset current challenges faced due to customer concentration and biotech exposure. Furthermore, the continued product mix expectations of 55-60% from software and 40-45% from services suggest a balanced revenue strategy that supports sustained growth potential in the pharmaceutical research sector.

Simulations Plus Inc. faces significant challenges due to its high customer concentration and exposure to the volatile biotech sector, which is anticipated to result in continued weak demand in the near-to-middle-term. Although the company reported service revenue above consensus expectations, its software revenue of $12.6 million fell short of expectations, indicating difficulties in its primary revenue-generating segment. Furthermore, elevated SG&A expenses and a decline in R&D spending raise concerns about cost management and future growth prospects, limiting the potential for financial recovery and expansion.