Certara, Inc. (CERT): A Bull Case Theory

We came across a bullish thesis on Certara, Inc. on Stock Picker's Journey’s Substack by Gregg Jahnke. In this article, we will summarize the bulls’ thesis on CERT. Certara, Inc.'s share was trading at $9.53 as of August 6^th. CERT’s  forward P/E was 20.49 according to Yahoo Finance.

Certara (CERT), a leader in biosimulation, recently appeared on a low price-to-book screen, trading below 1.7x book and joining the bottom quintile of over 1,500 U.S.-based non-financial companies with over $1 billion in market cap. Though not initially seeking healthcare names, the author revisited Certara after noticing that prominent value hedge fund Select Equity bought over 1 million shares in the most recent quarter.

This was further supported by Wasatch Advisors, an admired growth investor, which owns 6% of the company and modestly increased its stake. Certara was taken public five years ago by William Blair, a boutique investment bank known for identifying niche, quality companies. A concise, clear presentation at the William Blair conference highlighted Certara’s business fundamentals: every major pharmaceutical company is a customer, either through software purchases or consulting engagements.

With the FDA’s phaseout of animal testing, Certara could be a major beneficiary as drugmakers seek alternative testing platforms. The company is modestly targeting 8–10% annual revenue growth despite a challenging pharmaceutical environment. Its CEO, a long-time executive formerly with DuPont and currently a board member at West Pharmaceutical, has been in place since Certara’s IPO, though the steep stock decline from $30 to $11 may raise questions about leadership longevity.

Encouragingly, the company initiated its first-ever stock buyback in April, authorizing up to $100 million and repurchasing $25 million last quarter. With a strong balance sheet and disciplined acquisitions, Certara presents an intriguing opportunity that merits deeper investigation, especially given its high-caliber shareholders and industry tailwinds.

Previously, we covered a bullish thesis on Schrödinger, Inc. by Unemployed Value Degen in September 2024, which highlighted the company’s AI-driven drug discovery model and long-term plan to generate recurring software and royalty revenue. The company’s stock price has depreciated by approximately 1.42% since our coverage. The thesis still stands as Schrödinger continues progressing toward its dual-revenue model. Gregg Jahnke shares a similar view but emphasizes Certara’s near-term biosimulation tailwinds.

Certara, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held CERT at the end of the first quarter which was 20 in the previous quarter. While we acknowledge the potential of CERT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.