New York,NY - On April 18, 2013, Taglich Brothers released an updated research report on Simulations Plus, Inc. (SLP) and reiterated a Speculative Buy rating with a 12-month price target of $5.45. The report noted the following key investment considerations:
• Increasing use of software tools and analytics for drug discovery and development is driving SLP’s growth.
• The biosimulation (model-based prediction) technology market is projected to grow 18.5% annually, reaching $1.2 billion in 2017, up from $432 million in 2011.
• SLP has penetrated only 15% of the 1,000+ potential pharmaceutical and biotechnology customers, leaving ample revenue upside. Toxicology products, release of MembranePlus™ in FY13, and development of a new chemical entity molecular library could underlie further revenue upside into FY14.
• 2Q13 profit (reported 4/10/13) was $1.1 million or $0.06 per share, up from $839,000 or $0.05 per share, on an 11.8% sales increase to $3.1 million. 2Q13 results were in line with our projections. Net income was up due to a decrease in operating expenses of 9.7% reflecting easier comparisons with 2Q12, during which the company incurred acquisition related costs.
• We are maintaining our FY13 EPS projection of $0.18 per share on sales of $10.4 million (up $100,000). The increase in sales reflects 2Q13 results. Offsetting the increase in our sales forecast is a reduction in our gross margin projection to 84% from 84.8%.
• We are maintaining our FY14 EPS projection of $0.23 per share on 12.1% sales growth to $11.7 million (up $200,000). We anticipate a price increase on software offerings, traction gains by MembranePlus, and a total of 70 (new) customers, up from 65 in FY13 and 59 in FY12.
The full report can be viewed at http://www.taglichbrothers.com/equityuniverse/companies/simplus/simplus.aspx.
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Simulations Plus, Inc., based in Lancaster, California, is a developer of drug discovery and development software, which is licensed to and used in drug research by major pharmaceutical and biotechnology companies worldwide.
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