Simulation Plus is a buy due to the growth of the drug trial simulation market, BTIG said. Analyst David Larsen initiated stock coverage with a Buy rating and $55 price target, saying the company is a “category leader” for model-informed drug development (MIDD) or simulations for biotech drug trials. “In our view, the use of highly specialized, detailed, and complex simulation models is a key and necessary part of almost all biotech and pharmaceutical drug development efforts,” Larsen said. “As products progress through clinical trial studies, researchers need models that can accurately analyze and assess things like the rate of absorption and drug interaction of compounds, toxicity and liver safety, information on clinical trial simulations and technical writing for regulatory submissions.” SLP 1D mountain Simulations Plus shares 1-day Investor interest in the stock has increased this year, with Simulations Plus up around 12% after falling the previous two years. The stock is down 22% in 2022 and 33% in 2021. However, the analyst’s $55 price target implies the stock could jump 35% from Monday’s closing price. On Tuesday, the stock rose 2.1%. The analyst expects the fast-growing MIDD sector to be on the rise for Simulations Plus, saying he expects the total addressable market to be around $2 billion, while testing Global clinics have a TAM of approximately $70 billion. He predicts that Simulations Plus can increase its revenue by around 10-15% per year. Larsen added that Simulations Plus hasn’t faced the same problem raising capital that plagues small businesses. “This means that as the pace of global clinical trials continues to grow, the SLP should also increase with a rising tide,” Larsen said. “We consider SLP’s current market penetration rate to be quite low, which means there is plenty of room for SLP to take share.” — CNBC’s Michael Bloom contributed to this report.
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