Schrödinger, Inc.'s (NASDAQ:SDGR) Profit Outlook
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. provides computational platform to accelerate drug discovery and materials design for biopharmaceutical and industrial companies, academic institutions, and government laboratories worldwide. The US$4.0b market-cap company posted a loss in its most recent financial year of US$25m and a latest trailing-twelve-month loss of US$20m shrinking the gap between loss and breakeven. The most pressing concern for investors is Schrödinger's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Check out our latest analysis for Schrödinger
Schrödinger is bordering on breakeven, according to the 4 American Healthcare Services analysts. They expect the company to post a final loss in 2021, before turning a profit of US$37m in 2022. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 74% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Schrödinger's upcoming projects, though, take into account that by and large healthcare tech companies, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing we’d like to point out is that Schrödinger 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. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
There are too many aspects of Schrödinger to cover in one brief article, but the key fundamentals for the company can all be found in one place – Schrödinger's company page on Simply Wall St. We've also compiled a list of essential 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.
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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