On Thursday, Oppenheimer has increased its price target on shares of Simulations Plus (NASDAQ:SLP) to $65.00, up from the previous $55.00, while maintaining an Outperform rating on the stock.
The adjustment follows the company's announcement of acquiring Pro-ficiency, a leading provider of simulation-enabled solutions for clinical and commercial drug development, for approximately $100 million in cash.
Simulations Plus, known for its contributions to drug discovery and development, has now expanded its offerings by integrating Pro-ficiency's expertise in clinical trial and launch training, data analytics, and outcomes.
This acquisition is expected to double Simulations Plus's total addressable market (TAM) to $8 billion, a move seen as complementary and synergistic to its existing platform.
Pro-ficiency stands out in the market with no direct competitors in simulation training for clinical trials and offers unique simulation-based medical communication services. The strategic acquisition is anticipated to create substantial cross-selling opportunities due to a shared target customer base between the two companies.
The positive outlook is further supported by Simulations Plus's updated revenue guidance for the fiscal year 2024, which is now forecasted to be between $69 million and $72 million. The revised price target reflects the confidence in the company's growth prospects following this strategic expansion.
In other recent news, Simulations Plus has seen significant developments. The company reported a robust 16% increase in revenue for the second quarter of fiscal 2024, with its services segment demonstrating a notable 27% increase.
Additionally, Simulations Plus has expanded its market reach by acquiring Pro-ficiency Holdings, Inc. for $100 million. This strategic move is expected to double the company's total addressable market (TAM) to $8 billion.
Further, the U.S. Food and Drug Administration (FDA) renewed its license for Simulations Plus's DILIsym software platform, marking a continued partnership. This software serves as a tool for predicting drug-induced liver injury (DILI) risk in new drug candidates.
Simulations Plus's recent developments also include potential investments and strategic acquisitions to strengthen its market position. The company remains well-capitalized and debt-free, committed to its capital allocation strategy for future strategic acquisitions and partnerships. These are the latest developments in the company's ongoing efforts to leverage its strengths and expand its reach in the pharmaceutical and chemical industries.
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