Last Update 08 Feb 26

CERT: Biosimulation Expansion And New CEO Hire Will Support Shares

Analysts have trimmed their average price target on Certara to about $12, down from roughly $13. This reflects a mix of caution around competition and regulatory pressure, as well as continued confidence in the company's position in biosimulation and its potential to expand further into early stage drug development.

Analyst Commentary

Recent research points to a mixed but generally constructive view on Certara, with opinions clustering around execution in biosimulation, valuation reset after a choppy period for healthcare IT stocks, and how quickly the company can convert its position into broader commercial traction.

Bullish Takeaways

Bullish analysts highlight Certara as a leader in biosimulation, emphasizing its role in helping drug developers identify potential targets and reduce reliance on early stage clinical work. They see this as a key driver of long term demand.
Some see the stock’s earlier underperformance as tied to specific factors like softer Q3 services bookings, biopharma budget delays, and a CEO change, and argue that these issues have led to a reset in expectations rather than a broken growth story.
There is optimism that the company can deepen penetration in discovery and preclinical phases, supported by moves such as the Chemaxon acquisition, which are viewed as important for broadening its revenue base.
Even with trimmed price targets, bullish analysts point to what they view as a more reasonable valuation after prior weakness, paired with an improving market backdrop for biopharma spending.

Bearish Takeaways

Bearish analysts cite competition and regulatory impacts as key overhangs that could cap valuation multiples, especially after a period in which healthcare IT names have already seen estimates and valuations reset.
Some prefer to stay neutral until there is clearer evidence that modernization efforts in drug development are translating into stronger execution and more consistent traction in bookings.
Concerns around recent softness in services bookings and the impact of leadership changes are viewed as signs that execution risk remains, particularly if biopharma budgets stay slow to convert into new projects.
Cautious views generally focus on the need for Certara to prove that its leadership in biosimulation can sustain growth across new phases of drug development without pressuring margins or returns on acquired assets.

What's in the News

Certara announced that Jon Resnick will become Chief Executive Officer on January 1, 2026, succeeding Dr. William F. Feehery, whose role as CEO ends on December 31, 2025 (Key Developments).
Resnick joins Certara after serving as President for the U.S. and Canada regional business of IQVIA Holdings Inc., following senior roles in IQVIA’s Real World Solutions business and earlier positions at IMS Health (Key Developments).
Before his industry roles, Resnick worked for the U.S. Senate Committee on Finance, advising on healthcare policy and legislation related to Medicare, Medicaid, and broader health care reform (Key Developments).
Dr. Feehery’s departure is being treated as a termination without cause under his existing employment agreement, which includes post employment payments and benefits, contingent on his signing a release of claims in favor of Certara and its affiliates (Key Developments).

Valuation Changes

Fair Value: Modeled fair value remains steady at $12.38, with no change from the prior estimate.
Discount Rate: The discount rate has risen slightly from 8.75% to 8.87%, implying a marginally higher required return in the model.
Revenue Growth: Assumed long term revenue growth is effectively unchanged, holding around 7.09%.
Net Profit Margin: The long term net profit margin assumption is stable at roughly 6.33%, with only a minimal adjustment.
Future P/E: The assumed future P/E multiple has edged up slightly from 75.92x to 76.18x, indicating a small change in how earnings are valued in the model.

Regulatory approvals and industry trends are boosting demand for Certara's biosimulation platforms, expanding its market and supporting stronger revenue streams.
Product innovation, strategic acquisitions, and cloud-based SaaS models increase customer retention, cross-selling, and margins, enhancing long-term profitability and earnings stability.
Certara's growth and profitability face risks from slow pharma adoption, reliance on large customers, rising costs, regulatory uncertainty, and possible delays in achieving returns from technology investments.

Catalysts

About Certara

Provides technology-enabled services and software products for biosimulation in drug discovery, preclinical and clinical research, regulatory submissions, and market access in the United States and internationally.What are the underlying business or industry changes driving this perspective?

The recent qualification of Certara's Simcyp platform by the European Medicines Agency sets it apart as the only PBPK modeling tool with such approval, likely to increase customer adoption among global pharma companies seeking regulatory certainty and speed for their drug approvals, supporting future revenue growth.
Strong industry and regulatory momentum-such as the FDA's guidance to phase out animal testing in monoclonal antibody development-are rapidly increasing the need for biosimulation and model-informed drug development, expanding Certara's addressable market and driving sustained demand, positively impacting both revenues and bookings.
The upcoming commercial launch of Certara's next-generation, AI-enabled MIDD platform and CertaraIQ QSP software leverages advanced analytics and machine learning, providing differentiated capabilities that democratize access and increase the potential customer base, which should translate to higher recurring revenue and margin expansion through cloud-based SaaS models.
Integration of newly acquired businesses (like Applied BioMath and Formedix), combined with more robust cross-selling between consulting and software offerings, positions Certara to drive higher deal sizes and improve operating leverage, which strengthens both net margins and operating income over time.
Investment in cloud-based delivery and ongoing product innovation (as shown with updates to Phoenix and Pinnacle21 suites) further enhances customer stickiness and predictability of subscription revenue, supporting gross margin stability and long-term earnings growth.

Certara Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Certara's revenue will grow by 8.6% annually over the next 3 years.
Analysts assume that profit margins will shrink from 2.0% today to 1.4% in 3 years time.
Analysts expect earnings to reach $7.4 million (and earnings per share of $0.04) by about September 2028, down from $8.0 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 385.3x on those 2028 earnings, up from 211.3x today. This future PE is greater than the current PE for the US Healthcare Services industry at 54.8x.
Analysts expect the number of shares outstanding to decline by 0.22% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.27%, as per the Simply Wall St company report.

Certara Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The company faces potential headwinds from pharmaceutical industry cost containment, large pharma customer caution, and increased geopolitical and macroeconomic uncertainty-factors (including proposed tariffs and new pricing algorithms) that could delay decision-making and depress R&D budgets, which would negatively impact Certara's revenue and bookings growth in the long term.
Certara's R&D and operational spending has been increasing, with significant discretionary investments in software development, AI, and new product launches, and with the integration of multiple recent acquisitions. If these investments fail to generate expected adoption or ROI, operating expenses and margin pressure could undermine net earnings and profitability.
The company's continued growth depends heavily on adoption of new technologies (AI-enabled platforms, next-generation QSP products, etc.) and regulatory acceptance; any delays, low market uptake, or challenges in convincing regulators to integrate AI with model-informed drug development could slow software growth and diminish future revenues.
Although there is optimism about the multibillion-dollar addressable market for biosimulation (especially due to moves like the FDA's push to phase out animal testing), the adoption curve in pharma is often slow and complex, with many customers only piloting or cautiously expanding platform use-if customer education, regulatory clarity, or adoption stalls, bookings and revenue growth may not materialize as quickly as projected, affecting long-term earnings.
Certara's top-line and financial performance remains exposed to customer tier concentration; softness or timing issues from large Tier 1 customers can cause significant volatility in bookings and renewal cycles, making revenue less predictable and increasing risk to both revenue consistency and operating margins if consolidation or budget reductions occur among top clients.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $14.111 for Certara based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $16.0, and the most bearish reporting a price target of just $11.5.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $519.5 million, earnings will come to $7.4 million, and it would be trading on a PE ratio of 385.3x, assuming you use a discount rate of 8.3%.
Given the current share price of $10.5, the analyst price target of $14.11 is 25.6% higher. Despite analysts expecting the underlying buisness to decline, they seem to believe it's more valuable than what the market thinks.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Analysts Maintain Certara Price Target as Pharma Sector Recovery and New Developments Drive Outlook