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KeyBanc Downgrades Simulations Plus (SLP) Stock to Sector Weight

Simulations Plus, Inc. (NASDAQ:SLP) is one of the Best Beaten Down Stocks to Buy Now. KeyBanc downgraded the company’s stock to “Sector Weight” from “Overweight” without a price target, as reported by The Fly. The downgrade from the firm highlighted ongoing challenges in the biopharma end market environment, which the firm opines impacts Simulations Plus, Inc. (NASDAQ:SLP) more severely because of the customer concentration and biotech exposure. Furthermore, the firm expects weaker customer demand to continue in the near-to-middle-term.

A close-up view of a scientist’s hand pressing keys on a laptop as another looks closely at a 3-D model on a large monitor.

In Q3 2025, Simulations Plus, Inc. (NASDAQ:SLP)’s revenue increased by 10%, in line with its preliminary revenue. The company’s software revenue performed well, increasing 6%, mainly because of its ADMET Predictor® software and due to modest growth in its GastroPlus® and MonolixSuiteTM software. Furthermore, the services revenue for Q3 2025 increased 17%, primarily because of strong performance in the Medical Communications services.

During Q3 2025, Simulations Plus, Inc. (NASDAQ:SLP) implemented a strategic reorganization, pivoting from a business unit structure to a functionally driven operating model. This was the final phase of a multi-year transformation in order to streamline operations, unlock synergies, and concentrate resources towards the promising growth opportunities. For FY 2025, Simulations Plus, Inc. (NASDAQ:SLP) expects revenue of between $76 million – $80 million. Wasatch Global Investors, an asset management company, released its Q3 2024 investor letter. Here is what the fund said:

 “Simulations Plus, Inc. (NASDAQ:SLP) was the strategy’s largest detractor from performance during the quarter. The company develops and produces software that helps pharmaceutical companies achieve efficiencies in the drug discovery process by enabling them, through simulations, to either fine-tune or avoid clinical trials, which are expensive and have a high failure rate. Simulations Plus has a long track record of delivering consistent growth and margin expansion. However, the stock has been down due to concerns about the funding environment for biotechnology and pharmaceutical companies. We reduced our position in Simulations Plus over concerns linked to the company’s recent acquisition strategy, which we will continue to monitor. However, we remain confident in the growth potential of the company’s core business.”

Simulations Plus, Inc. (NASDAQ:SLP) is in the software industry. It is engaged in developing and producing software for use in pharmaceutical research and for education, and offers consulting as well as contract research services to the broader pharmaceutical industry.

While we acknowledge the potential of SLP to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than SLP and that has 100x upside potential, check out our report about this cheapest AI stock.

READ NEXT: 13 Cheap AI Stocks to Buy According to Analysts and 11 Unstoppable Growth Stocks to Invest in Now

Disclosure: None. This article is originally published at Insider Monkey.

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