KeyBanc Reiterates Overweight Rating on Certara Inc. (CERT)

KeyBanc analyst Scott Schoenhaus reiterated an Overweight rating and $15.00 price target on Certara Inc. (NASDAQ: CERT).

The analyst commented, "CERT pre-reported 4Q top-line results in January. That said, 4Q adjusted EBITDA was in line with consensus. Notably, CERT's 4Q total bookings represented ~22% growth y/y, including software bookings growth of ~38% (highest growth rate since 4Q21) and services bookings growth of ~12% as the Company saw healthy software and services bookings from its Tier 1 and 3 customers. Additionally, the Company's regulatory business experienced its first quarter of y/y growth in 4Q (up MSD) for the first time in several quarters. CERT noted that customers continued to exhibit cautious spending behavior in 2024 and decision-making timelines continue to be elongated due to internal discussion with customers. Furthermore, CERT has not seen any change in customer sentiment that suggests that its end markets are materially different heading into FY25 and the Company's newly issued FY25 revenue guidance (top- and bottom-line guide in line) takes into consideration this assumption. Regarding its strategic review of its regulatory writing business, the Company has not made any decisions and is continuing to evaluate potential outcomes. Despite a services market that remains challenged, we see multi-pronged revenue opportunities from: 1) a healthy software backlog to convert to revenue heading into FY25; 2) the investment/development of existing and new software products (higher margin), including products for discovery and lead optimization phases (leveraging Chemaxon's existing capabilities alongside Certara technologies and AI;. 3) expansion of software modules and unification of software pillars on Certara Cloud; and 4) a consolidated and more aligned salesforce to execute on cross-selling strategies. We remain OW shares of CERT and our $15 price target is based on a ~6x multiple of our FY25 revenue estimate."

For an analyst ratings summary and ratings history on Certara Inc. click here. For more ratings news on Certara Inc. click here.

Shares of Certara Inc. closed at $12.40 yesterday.

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