TD Cowen analyst Brendan Smith has maintained their bullish stance on SDGR stock, giving a Buy rating yesterday.
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Brendan Smith has given his Buy rating due to a combination of factors that highlight Schrodinger’s strategic discipline and progress across multiple fronts. The company reported a solid second quarter with revenues of $55 million, marking a 16% increase driven by a 15% growth in software revenues and a 19% increase in drug discovery revenues. The anticipated launch of their predictive tox software, currently in beta testing, is expected to capitalize on FDA-driven opportunities, potentially boosting software revenue in the medium to long term.
Management’s reaffirmation of fiscal year 2025 guidance further supports the Buy rating. The guidance includes expectations for software revenue growth between 10-15% annually, gross margins of 74-75%, and drug discovery revenues between $45-50 million. Additionally, operating expenses are projected to grow less than 5%, with a significant reduction in operating cash burn compared to fiscal year 2024. These factors, combined with effective cost-cutting and streamlining initiatives, underscore Schrodinger’s potential for sustained growth and financial stability.
According to TipRanks, Smith is a 2-star analyst with an average return of 0.0% and a 38.10% success rate. Smith covers the Healthcare sector, focusing on stocks such as Alpha Teknova, Cytek Biosciences, and Halozyme.
In another report released yesterday, Craig-Hallum also reiterated a Buy rating on the stock with a $30.00 price target.