Simulations Plus: Further Downside Is Likely (Rating Downgrade)

Group 1 - Simulations Plus (SLP) share price dropped significantly after the company reported preliminary Q3 FY25 results that did not meet expectations [1] - The current weakness in Simulations Plus is attributed to soft biopharma market conditions and the company's relatively large services business [1] Group 2 - Narweena, an asset manager led by Richard Durant, focuses on identifying market dislocations due to misunderstandings of long-term business prospects [1] - Narweena aims to achieve excess risk-adjusted returns by targeting businesses with secular growth opportunities in markets with barriers to entry [1] - The research process at Narweena emphasizes company and industry fundamentals to uncover unique insights [1] Group 3 - Narweena has a high risk appetite and a long-term investment horizon, seeking deeply undervalued stocks, particularly in smaller cap markets [1] - The firm believes that an aging population with low growth and stagnating productivity will create new investment opportunities [1] - Many industries may face stagnation or secular decline, which could paradoxically enhance business performance due to reduced competition [1] Group 4 - The economic landscape is increasingly characterized by asset-light businesses, leading to a declining need for infrastructure investments [1] - A large pool of capital is pursuing a limited set of investment opportunities, resulting in rising asset prices and compressed risk premia over time [1]