Certara initiated with a Market Perform at Leerink

Leerink analyst Michael Cherny initiated coverage of Certara with a Market Perform rating and $19 price target. Although its valuation is below historical averages, a large part of the disparity is due to the company posting topline growth below expected mid-teens as of late, the firm notes. That said, Certara is not alone as its closest peers have also seen recent multiple contraction as a consequence of tightening biopharma R&D spend as well as the current rate environment, both inevitably limiting new drug projects, Leerink says. While the firm is “undoubtedly optimistic” about the runway for growth of bio simulation, the aforementioned macro factors as well as some of the company-specific initiatives that have yet to give fruit keep Leerink on the sidelines.