When Will Schrödinger, Inc. (NASDAQ:SDGR) Turn A Profit?

By
Simply Wall St
Published
June 01, 2021
NasdaqGS:SDGR
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Schrödinger, Inc. (NASDAQ:SDGR) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Schrödinger, Inc. provides physics-based software platform that enables discovery of novel molecules for drug development and materials applications. The US$5.0b market-cap company posted a loss in its most recent financial year of US$24m and a latest trailing-twelve-month loss of US$11m shrinking the gap between loss and 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.

Check out our latest analysis for Schrödinger

Consensus from 5 of the American Healthcare Services analysts is that Schrödinger is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of US$44m in 2023. Therefore, the company is expected to breakeven roughly 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 64%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
NasdaqGS:SDGR Earnings Per Share Growth June 2nd 2021

Underlying developments driving Schrödinger's growth isn’t the focus of this broad overview, though, bear in mind that by and large healthcare tech companies, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. Schrödinger currently has no debt on its balance sheet, which is rare for a loss-making healthcare tech company, which typically has high 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.

Next Steps:

There are key fundamentals of Schrödinger which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Schrödinger, take a look at Schrödinger's company page on Simply Wall St. We've also put together a list of essential factors you should further examine:

  1. Valuation: What is Schrödinger worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Schrödinger is currently mispriced by the market.
  2. 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.
  3. 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. 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.
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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.