On Wednesday, Simulations Plus (NASDAQ:SLP) stock received a reaffirmed Outperform rating and $65.00 price target from Oppenheimer. The company's reported third-quarter fiscal year 2024 revenues reached $18.5 million, surpassing both the firm's forecast of $18.1 million and the consensus on the Street of $17.9 million.
The performance was notably driven by robust software revenue, which exceeded expectations, and continued growth in the services segment, despite a slight miss on the firm's projection.
The analyst expressed optimism about the company's revenue mix, highlighting the importance of a higher software-to-services ratio for Simulations Plus's long-term profitability. With the FY24 guidance maintained at $69-72 million, the company appears to be on track to meet its top-line goals for the year.
However, Simulations Plus has updated its earnings per share guidance, now expecting diluted EPS to be between $0.46 and $0.48, a reduction from the previously forecasted range of $0.54 to $0.56. This adjustment is attributed to higher-than-anticipated transaction costs.
Despite this revision, the acquisition of Proficiency is anticipated to be accretive to the earnings per share for the fiscal year 2025, according to the company's management.
Investors and analysts can anticipate further details and FY25 guidance during the fourth-quarter fiscal year 2024 conference call, which is scheduled for October. The steadfast Outperform rating and $65 price target by Oppenheimer reflect confidence in the company's strategic direction and financial outlook.
In other recent news, Simulations Plus, Inc. reported its third-quarter fiscal 2024 results, meeting its targets with a 14% increase in revenue and reported diluted earnings per share (EPS) of $0.15, along with an adjusted EPS of $0.19.
The company's acquisition of Pro-ficiency is expected to enhance its offerings and contribute to future earnings. Despite higher transaction costs affecting EPS, Simulations Plus remains on track to meet its full-year guidance, with projected revenues ranging from $69 million to $72 million.
The company's Software and Services segments grew by 12% and 18% respectively, and the Pro-ficiency acquisition is progressing well, with an expected contribution of $3 million to fiscal year 2025 earnings.
However, the company experienced higher than expected transaction costs, leading to a decrease in EPS guidance from $0.54-$0.56 to $0.46-$0.48. General and administrative costs have also increased due to new hires and the acquisition of Immunetrics.
Simulations Plus also announced that its quarterly cash dividend has been discontinued to prioritize growth investments, with a total backlog of $19.6 million at the end of Q3. The company's long-term goal is to achieve an adjusted EBITDA margin of 35% to 40%. These are recent developments, reflecting the company's efforts to strengthen its financial profile and position itself for future growth.
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