Schrodinger (SDGR) AI Stock Analysis

• Market Cap: $961.94M
• Dividend Yield: N/A
• Average Volume (3M): 1.67M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.73
• Revenue Growth: 32.90%
• EPS Growth: 1.85%
• Country: US
• Employees: 891
• Sector: Healthcare
• Sector Strength: 45
• Industry: Medical - Healthcare Information Services
• EPS (TTM): 0.45
• Shares Outstanding: 64,660,910
• 10 Day Avg. Volume: 1,558,885
• 30 Day Avg. Volume: 1,670,026
• PEG Ratio: 0.28
• Price to Book (P/B): 3.61
• Price to Sales (P/S): 5.13
• P/FCF Ratio: 105.42
• Enterprise Value/Market Cap: 0.87
• Enterprise Value/Revenue: 3.28
• Enterprise Value/Gross Profit: 5.88
• Enterprise Value/Ebitda: -9.78
• 1Y Price Target: $20.40
• Price Target Upside: 56.56% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): -1.73
• Revenue Forecast (FY): $271.27M

• Rating: 50 Neutral
• Price Target: $12.00 ▼(-7.90% Downside)
• Action: Reiterated Date: 02/26/26
• Date: Action: Reiterated 02/26/26

The score is held back primarily by inconsistent financial performance (ongoing losses despite improved 2025 cash flow) and a clearly bearish technical trend. Earnings-call guidance and strategic clarity (ACV growth, hosted transition, path to profitability with strong cash) partially offset these risks, while valuation remains constrained by negative earnings and no dividend support.

Positive Factors

Recurring software scale & high gross margins

A ~ $200M ACV base and mid-to-high 70s gross margins create durable, subscription-like economics. That recurring revenue mix supports predictable cash flows, enables operating leverage as sales scale, and gives room to invest in R&D while improving long-term margin conversion.

Strong cash runway

A cash balance near $400M materially reduces near-term financing risk and underwrites the multi-year plan to reach positive adjusted EBITDA by 2028. It funds R&D, hosted transition costs and drug discovery programs, providing flexibility through revenue timing volatility and partnership cadence.

Diversified drug-discovery revenue and portfolio optionality

Material drug-discovery revenue and an expanding portfolio of partnered and internal programs create a second, asymmetric value stream. Milestones and royalties from clinical-stage programs provide durable upside independent of software cycles and align the platform with downstream commercial economics.

Negative Factors

Persistent losses and declining equity base

Cumulative losses that have materially reduced shareholders' equity weaken balance-sheet flexibility and limit strategic optionality. Negative returns (ROE) and shrinking equity increase reliance on cash reserves and make the company more vulnerable to financing stress if operating improvement slips.

Revenue volatility and recent sharp declines

Large, recent revenue swings reflect sensitivity to collaboration timing, recognition effects and end-market funding that undermine predictability. Sustained volatility complicates resource planning, masks true organic growth trends, and raises execution risk until multi-year top-line stability is re-established.

Hosted transition creates durable reporting and margin headwinds

Moving customers to hosted contracts improves long-term recurring economics but produces persistent near-term revenue recognition drag and margin compression during the transition. This reduces comparability of results, delays visible profitability and raises execution risk if adoption is slower than planned.

Schrodinger Business Overview & Revenue Model

Company Description

Schrödinger, Inc., together with its subsidiaries, provides physics-based software platform that enables discovery of novel molecules for drug development and materials applications. The company operates in two segments, Software and Drug Discovery. The Software segment is focused on selling its software for drug discovery in the life sciences industry, as well as to customers in materials science industries. The Drug Discovery segment focuses on building a portfolio of preclinical and clinical programs, internally and through collaborations. The company serves biopharmaceutical and industrial companies, academic institutions, and government laboratories worldwide. Schrödinger, Inc. was incorporated in 1990 and is based in New York, New York.

How the Company Makes Money

Schrodinger generates revenue through a combination of software licensing, subscription fees for its computational platform, and collaborations with pharmaceutical and biotechnology companies. Key revenue streams include the sale of licenses to its software products, which provide users access to its advanced predictive modeling tools, as well as consulting services that help clients optimize their research workflows. Additionally, Schrodinger has established significant partnerships with major pharmaceutical companies, contributing to its earnings through collaborative research agreements and milestone payments tied to the development of drug candidates. These partnerships often lead to shared outcomes, allowing Schrodinger to benefit from the success of its clients' products in the market.

Schrodinger Financial Statement Overview

Summary

Solid gross margins and manageable leverage are positives, and 2025 showed a meaningful turn to positive operating and free cash flow. However, results remain dominated by persistent losses, a shrinking equity base, and uneven growth/visibility, keeping the financial profile mid-to-lower quality overall.

Income Statement

Revenue expanded from $108.1M (2020) to $255.9M (2025), but the trajectory has become choppy with two straight years of revenue decline (2024: -4.2%; 2025: -42.1%). Gross margins are solid for the business model (roughly mid-50s to mid-60s), indicating good underlying unit economics. However, profitability remains the key weakness: operating results are deeply negative and net margins have been consistently loss-making in most years (2025 net margin about -40%), with 2023 profitability not sustained. Overall, strong gross profit profile but insufficient scale/expense control to translate into consistent earnings.

Balance Sheet

Leverage appears manageable, with debt-to-equity staying relatively low-to-moderate (about 0.14–0.30) and total debt roughly stable around ~$109M–$128M in recent years. That said, the equity base has been trending down from $624.0M (2020) to $364.1M (2025), consistent with cumulative losses and reducing balance-sheet flexibility over time. Returns to shareholders are currently weak (2025 return on equity about -28%), reflecting ongoing profitability issues. Net: reasonable leverage, but declining equity and negative returns are notable risks.

Cash Flow

Cash generation has improved recently, with operating cash flow turning positive in 2025 ($13.9M) after sizable outflows in 2021–2024, and free cash flow also positive in 2025 ($12.5M). However, cash flow stability is a concern: free cash flow has been negative for several consecutive years before the 2025 rebound, and free cash flow growth is highly volatile. While 2025 free cash flow covered most of the net loss (free cash flow to net income ~0.90), the business has not yet demonstrated consistent, repeatable cash generation across the cycle.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	255.87M	207.54M	216.67M	180.96M	137.93M
Gross Profit	142.61M	132.08M	140.69M	101.02M	65.62M
EBITDA	-96.30M	-203.14M	-171.90M	-142.47M	-108.60M
Net Income	-103.27M	-187.12M	40.72M	-149.19M	-100.39M
Balance Sheet
Total Assets	726.16M	823.23M	802.96M	688.59M	756.49M
Cash, Cash Equivalents and Short-Term Investments	395.46M	352.12M	463.00M	451.09M	576.48M
Total Debt	109.23M	117.83M	127.88M	116.49M	79.87M
Total Liabilities	362.11M	401.78M	254.40M	240.68M	199.40M
Stockholders Equity	364.05M	421.44M	548.56M	447.89M	557.07M
Cash Flow
Free Cash Flow	12.46M	-164.68M	-150.14M	-127.70M	-77.84M
Operating Cash Flow	13.90M	-157.37M	-136.73M	-119.68M	-70.67M
Investing Cash Flow	57.90M	148.84M	193.03M	90.02M	-16.81M
Financing Cash Flow	2.93M	10.12M	9.05M	2.11M	7.95M

Schrodinger Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 13.03
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SDGR, the sentiment is Neutral. The current price of 13.03 is above the 20-day moving average (MA) of 12.26, below the 50-day MA of 15.09, and below the 200-day MA of 18.83, indicating a neutral trend. The MACD of -0.63 indicates Negative momentum. The RSI at 48.97 is Neutral, neither overbought nor oversold. The STOCH value of 78.81 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SDGR.

Schrodinger Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CERT	61 Neutral	$1.14B	-885.94	-0.15%	―	11.47%	―
TXG	55 Neutral	$2.76B	-46.73	-5.78%	―	1.92%	59.18%
OMCL	54 Neutral	$1.92B	1,014.72	0.17%	―	10.67%	―
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%
SDGR	50 Neutral	$961.94M	-12.72	-26.29%	―	32.90%	1.85%
SOPH	48 Neutral	$293.78M	-3.99	-86.09%	―	13.66%	-2.65%
DH	47 Neutral	$174.23M	-2.20	-47.69%	―	-5.30%	46.01%