SDGR - Schrödinger: More Pharmaceutical Than Software

2024-05-07 12:30:13 ET

Summary

• Market conditions remain tough, which is weighing on demand for both Schrödinger's software and drug discovery services.
• Investors continue to punish Schrödinger's investments in drug discovery, despite the company progressing drug candidates into clinical trials.
• While Schrödinger's valuation is attractive, investors are focused on the company's large losses and modest growth.
• Clinical success may be required before Schrödinger's various ventures are appropriately valued.

Schrödinger, Inc.'s ( SDGR ) first quarter earnings were somewhat disappointing, although it is difficult to read much into this given tough market conditions and the lumpy nature of the company's revenue. More importantly, Schrödinger is rapidly becoming a drug discovery company with a highly attractive software business on the side. Investors still aren't treating Schrödinger like a pharmaceutical company though, despite the shift in the company's priorities....

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