NEW YORK – Wall Street giant Morgan Stanley has officially initiated coverage on Certara Inc.

NEW YORK – Wall Street giant Morgan Stanley has officially initiated coverage on Certara Inc. (NASDAQ: CERT) with an Equalweight rating and a $16.00 price target, reflecting a cautious but positive view on the life sciences technology company’s long-term potential.

According to the latest data from InvestingPro, Certara currently has a market capitalization of approximately $1.86 billion, with analysts’ price targets ranging from $13 to $18.

Biosimulation Software Drives Growth
Certara is one of the pioneers in applying biosimulation platforms and in silico models to the drug research and development process. This is seen as a way to optimize clinical trial design, especially as regulators like the FDA push to eliminate animal testing.

In fiscal 2024, Certara will record revenue of $385 million, up 9% year-over-year, including:

Software: $156 million

Services: $239 million

Morgan Stanley forecasts the company will reach $420 million in revenue in 2025, continuing its 9% growth rate. Software revenue is expected to increase to $184 million, while services are estimated to reach $236 million – indicating that software is making up an increasingly large portion of the business.

Q1 2025 Results: Beats Expectations
Certara started 2025 strong with Q1 revenue of $106 million, up 10% year-over-year. Notably, earnings per share (EPS) reached $0.14, beating the forecast of $0.11.

A key highlight was adjusted EBITDA of $34.8 million, up 20% YoY, indicating improved operating efficiency.

Re-ratings from analysts
Barclays: Upgrades rating to Overweight, $14 price target, highlights Certara's leadership in biomimetics and ability to exploit regulatory changes related to drug testing.

JMP Securities: Maintains Market Perform rating, highlights stable growth performance and alignment with market expectations.

In addition, the company announced a $100 million share repurchase program, further reinforcing confidence in its cash flow generation and shareholder value delivery strategy.

Strategic Advantage from FDA Changes
Another potential driver comes from the FDA’s move to eliminate animal testing requirements in drug reviews, particularly for biologics like monoclonal antibodies. This opens up a huge opportunity for Certara, which has strengths in AI, machine learning (ML), and advanced computational modeling.

The company is also conducting a strategic review of its regulatory services business, which could lead to new business structure changes and margin optimization.

CERT – Undervalued or on the cusp of a breakout?

Although not yet in the group of stocks rated as “most attractively valued” by InvestingPro’s algorithms, Certara is still receiving a lot of attention thanks to:

Good financial health

Stable growth

Exclusive position in the field of biomimetics

In the context of the pharmaceutical - biotechnology industry restructuring the research model, CERT can be one of the stocks that directly benefit from the trend of shifting to high-tech platforms, reducing costs and increasing accuracy.

Conclusion
With Morgan Stanley initiating an Equalweight rating and a positive consensus from major analysts, Certara is asserting itself as a potential long-term stock. The focus on biomimetics technology and the shift in FDA policy are key factors that can take CERT further in 2025 and beyond.