With the business potentially at an important milestone, we thought we'd take a closer look at Schrödinger, Inc.'s (NASDAQ:SDGR) future prospects. 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’s loss has recently broadened since it announced a US$100m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$135m, moving it further away from breakeven. As path to profitability is the topic on Schrödinger's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
According to the 8 industry analysts covering Schrödinger, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$2.9m in 2024. So, the company is predicted to breakeven approximately 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 71% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Schrödinger's upcoming projects, though, bear in mind that typically a healthcare tech company has lumpy cash flows which are contingent on the product and stage of development the company is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing we’d like to point out is that Schrödinger has no debt on its balance sheet, which is quite unusual for a cash-burning healthcare tech company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on Schrödinger, so if you are interested in understanding the company at a deeper level, take a look at Schrödinger's company page on Simply Wall St. We've also put together a list of pertinent factors you should further research:
Historical Track Record: What has Schrödinger's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Schrödinger's board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.