Schrödinger (SDGR) has been featured as a key player in the recent industry spotlight on artificial intelligence innovation within biotechnology. The focus is on its work in AI-powered drug discovery and its support for clinical trials.
See our latest analysis for Schrödinger.
Schrödinger’s share price has climbed 18.2% over the last month, with momentum building amid a year-to-date rise of 10.4%. Over the past 12 months, total shareholder return hit 27.4%, highlighting renewed optimism after years of lagging performance.
Given the surge in biotech and AI-powered innovation, it could be the perfect moment to expand your research into other healthcare pioneers. See the full list for free with See the full list for free.
With shares trading nearly 20 percent below analyst price targets and impressive growth in both revenue and AI innovation, is Schrödinger offering a rare value opportunity, or is the market already accounting for its future ambitions?
Schrödinger’s most popular narrative puts its fair value at $27.30, notably higher than the last close at $22.52, suggesting the crowd still sees considerable upside. With impressive revenue growth and industry-leading technology, the long-term outlook appears optimistic, provided the bullish assumptions turn out to be true.
Expansion of large-scale strategic partnerships and collaborations (e.g., with Novartis, Lilly, and Otsuka), combined with consistent 100% retention among largest customers and robust renewal discussions, increase near and long-term earnings visibility and reduce churn risk, stabilizing future earnings and free cash flow.
Read the complete narrative.
What’s fueling such a premium price target? The most intriguing part is that this narrative leans on ambitious projections for recurring revenue, future software demand, and strong earnings visibility. Curious which numbers tip the scales? Dive into the full breakdown to see how these bold financial levers could drive exceptional returns.
Result: Fair Value of $27.30 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, a slowdown in new customer growth or pressure on software margins could quickly change this optimistic outlook for Schrödinger’s future earnings.
Find out about the key risks to this Schrödinger narrative.
Looking at the price-to-sales ratio, Schrödinger trades at about 7x, which is more than double the US Healthcare Services industry average of 3.2x and far above peer averages at 2.6x. The estimated fair ratio stands at just 3x. This stark gap suggests that, by this metric, the stock carries valuation risk if the market pulls back to more conservative benchmarks. Could momentum alone keep Schrödinger’s valuation on a premium path, or does this set up the potential for a reset?