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Let’s Talk about Recently Listed Certara Stock
Stock Analysis & Ideas

Let’s Talk about Recently Listed Certara Stock

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Certara has disappointed investors with sluggish returns since its listing. However, the company is confident about its long-term growth potential as it makes efforts to expand portfolio offerings and grow inorganically.

After a blockbuster debut, Certara, Inc. (NASDAQ: CERT) has not been able to keep its promise of giving strong returns to its investors. Shares of the drug simulation software maker have declined about 46.5% since its listing.

The company is exposed to various headwinds like the COVID-19 pandemic, regulatory issues, and foreign exchange fluctuations. Also, overall pessimism in the market, due to the rising interest rate environment, might have weighed on the company’s share price.

What Does Certara Do?

Headquartered in Princeton, NJ, Certara provides biosimulation software and technology to biopharmaceutical companies. According to Certara, its integrated end-to-end platform is used by more than 2,000 biopharmaceutical companies and academic institutions across 62 countries. Furthermore, 17 global regulatory authorities, including the U.S. FDA, have access to the company’s biosimulation software for several applications.

A Snapshot of CERT’s IPO

Certara became a member of the Nasdaq after an upsized initial public offering (IPO) of its 29,055,000 shares of Class A common stock at $23 per share. Through the IPO, the company raised $316.3 million in net proceeds (after deducting underwriting discounts and commissions but before offering costs).

Shares of the company closed at $38.08 on the first day of trading (on December 11, 2020), up nearly 65.6% from the IPO price. CERT’s stock touched its all-time high closing price of $45.21 in November 2021.

Presently, Certara commands a market capitalization of $3.25 billion.

Recent Developments Give Mixed Signals

Certara recently reported mixed second-quarter 2022 results. Its adjusted earnings per share came in at nine cents, missing the consensus estimate of 10 cents. It had posted earnings of seven cents in the same quarter last year.

Meanwhile, total revenues came in at $82.8 million, rising 18% year-over-year on a reported and 21% on a constant currency basis. The upside is largely driven by the company’s strength in technology-driven services and software product portfolio. 

However, facing a slowdown in the regulatory services business, the company has revised its guidance for the full-year 2022. It now expects to report revenues between $325-$335 million against the previously stated range of $350-$360 million. The adjusted earnings are also estimated between 43 cents and 48 cents, comparing unfavorably with the range of 48-53 cents provided earlier.

Moving on, the company has recently introduced two new software solutions, Simcyp Discovery Simulator and the Pinnacle 21 Data Exchange product, to expand its portfolio offerings.

Certara has also entered into a two-year partnership with Memorial Sloan Kettering Cancer Center to develop new biosimulation software, a Chimeric antigen receptor (CAR) T-cell therapy biosimulation platform.

Is Certara Stock a Buy?

Turning to Wall Street, analysts seem to be optimistic about CERT, which has a Strong Buy consensus rating based on five Buys.

Similarly, financial bloggers are 100% Bullish on Certara. Hedge funds, too, are positive about the stock, as they have collectively bought 77,000 shares of CERT in the last quarter.

Key Takeaways for CERT Investors

Certara is making efforts to expand its portfolio offerings and grow inorganically. The management remains confident about the company’s long-term growth potential and profitability. The stock also has upside potential of 21.8%. However, the company is facing several headwinds like softness in regulatory services and foreign exchange. Lastly, with Certara lowering its guidance for the full-year 2022, investors might want to observe the stock for some time.

Read full Disclosure.

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