After markets closed ahead of the Juneteenth holiday Simulation Plus (SLP), a maker of drug discovery and development software, revealed it would delay its next earnings call twelve days and raised questions about the quality of its revenue guidance.

Immediately after reaffirming its Q3FY25 and FY25 revenue guidance— which was issued just seven days prior to the after-hours disclosure— Simulation Plus suggested the revenue guidance may be at risk, sowing doubt about the reaffirmation:

“The third quarter fiscal 2025 revenue range set forth above is preliminary, unaudited, based on currently available information, and subject to adjustment in the final financial statements to be filed with the Company’s Quarterly Report on Form 10-Q for the third quarter fiscal 2025, expected to be filed July 15, 2025, the SEC filing deadline. Full year fiscal 2025 revenue guidance may also be adjusted when the Company reports third quarter fiscal 2025 results.”

With an Enterprise Value (EV) of approximately $353 million, Simulation Plus is priced as if it will grow annual sales to more than $528.7 million, up from an estimated $81.7 million in 2025. To justify its current share price of $18.08 our Reverse DCF— which quantifies investor expectations embedded in the current share price— indicates Simulation Plus must:

—Grow sales 25% annually between 2027-2034, faster than the company’s estimated 2025 and 2026 sales growth of 16.7% and 8.6%, respectively
—Increase NOPAT margin to 16.5%, versus our 2024 estimate of 6.3% and three-year average estimate of 12.2%
—Increase Invested Capital (IC) Turns to 0.75, up from our three-year average estimate of 0.43

Notably, the current share price also implies Simulation Plus increases Return on Invested Capital (ROIC) to 12.38% from our three-year average estimate of 5.22%: