Certara, Inc. (NASDAQ:CERT) Is About To Turn The Corner

Certara, Inc. (NASDAQ:CERT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Certara Inc. provides software products and technology-enabled services to customers for biosimulation in drug discovery, preclinincal and clinical research, regulatory submissions, and market access. On 31 December 2020, the US$4.3b market-cap company posted a loss of US$49m for its most recent financial year. As path to profitability is the topic on Certara's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Certara

According to the 5 industry analysts covering Certara, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$9.2m in 2021. So, the company is predicted to breakeven approximately a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 80% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Certara's upcoming projects, but, keep in mind that by and large healthcare tech companies, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 37% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Certara which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Certara, take a look at Certara's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further examine:

1. Valuation: What is Certara worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Certara is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Certara’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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