Last Updated: 07 Nov 2024
Executive Summary
Schrodinger Inc. (SDGR) is a leading provider of physics-based software platforms for drug discovery and material applications. The company's strong platform and growing revenue have attracted positive analyst attention, with 3 Strong Buy and 5 Buy ratings. However, the company's negative earnings and high valuation metrics warrant caution.
Company Overview
Founded in 1990, Schrodinger provides software solutions that enable scientists to simulate and predict the behavior of molecules. The company's platform is used by pharmaceutical companies, biotechnology firms, and academic institutions worldwide.
Fundamental Analysis
Revenue: Revenue grew 0.345% year-over-year to $200.6 million in the latest quarter.
Earnings: The company reported a net loss of $200.5 million, resulting in an EPS of -$2.74.
Profitability: Schrodinger's profit margins remain negative, with a gross margin of -1.004% and an operating margin of -1.114%.
Valuation: The stock trades at a Price-to-Sales ratio of 6.49 and a Price-to-Book ratio of 2.748, indicating a premium valuation.
Technical Analysis
Trend: The stock price has been trending lower since reaching a 52-week high of $38 in January 2023.
Support and Resistance: The stock is currently trading near its 50-day moving average of $18.9, which could provide support. Resistance may be encountered at the 200-day moving average of $22.65.
Momentum: The Relative Strength Index (RSI) is below 50, indicating a lack of momentum.
Short Term Outlook
In the near term, Schrodinger's stock price could face headwinds due to its negative earnings and high valuation. The stock is currently trading below its 50-day moving average, and a break below this level could lead to further declines.
Long Term Outlook
The company's strong platform and growing revenue potential suggest that Schrodinger has long-term growth prospects. However, the company's negative earnings and high valuation could limit its upside potential in the near term.
Analyst Recommendations
Analysts are generally bullish on Schrodinger's long-term prospects, with 3 Strong Buy and 5 Buy ratings. The average analyst target price is $31.45, implying a potential upside of 66% from the current price.
