Why Did Craig-Hallum Upgrade Simulations Plus After Q4 Earnings?

Craig-Hallum has upgraded Simulations Plus Inc SLP to Buy from Hold with a price target of $53, down from $65.
Related: Simulations Plus Target Price Lowered At Craig-Hallum, Raymond James After Q3 Sales Miss Expectations.
The Company's Q4 report demonstrates that its services business has begun to recover, says analyst Matt Hewitt, who believes it is off to "a strong start for FY22."
He believes visibility has returned to the business. With the stock down about 50% from its high back in February, he views Simulations Plus as "once again a name we believe quality-focused investors should own."
Q4 sales increased 3% Y/Y to $9.8 million, surpassing the analyst estimate of $8.17 million. Software revenue increased 14% to $5.4 million.
FY22 Guidance: Simulations Plus expects sales of $51 million - $53 million, up 10% -15% Y/Y growth.
Software revenue is expected to be 55% - 60%, and services revenue 40% - 45% of total revenue.
Services revenue is expected to recover sequentially throughout fiscal 2022, and any acquisitions would be incremental to the revenue growth target above.
Price Action: SLP shares are up 9.61% at $45.56 during the market session on the last check Tuesday.

Momentum16.91

Growth27.97

Quality11.36

Value10.68

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Medium

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