On Thursday, Citi adjusted its outlook on Schrodinger (NASDAQ:SDGR) shares, a company specializing in chemical simulation software for pharmaceutical research. The firm reduced the price target from $39.00 to $37.00 but kept a Buy rating on the stock.
This move follows Schrodinger's first-quarter financial report for 2024, which revealed lower-than-anticipated results in both software and drug discovery revenues.
Schrodinger's management has recently changed its guidance methodology from the fiscal year 2023 earnings, setting new benchmarks for future expectations. The company's shares have faced downward pressure since the previous quarter's financial disclosure. However, Citi believes that these adjusted expectations might help alleviate the sales volatility that Schrodinger has historically experienced.
Despite falling short of first-quarter 2024 Street estimates, Schrodinger's management remains optimistic about meeting its full-year 2024 guidance. The company's quarterly operating results in its software and drug discovery divisions will continue to be closely monitored by investors.
Citi also highlighted the potential future catalysts for Schrodinger's stock. Notably, the firm is looking forward to the data readouts for clinical assets SGR-1505 and SGR-2921, which are expected to be significant contributors to the company's value. These data readouts are slated for late 2024 to 2025 and are anticipated to become key factors in driving the stock's performance as the year unfolds.
InvestingPro Insights
In light of Citi's recent outlook adjustment on Schrodinger (NASDAQ:SDGR), a closer look at the company's financials through InvestingPro data shows a mixed picture. With a market capitalization of $1.84 billion and a high P/E ratio of 46.46, investors might be weighing the company's growth prospects against its current earnings. Despite a significant return over the last week of 8.23%, Schrodinger's revenue declined by 4.36% over the last twelve months as of Q1 2024, and analysts are not expecting profitability this year.
InvestingPro Tips suggest that while Schrodinger holds more cash than debt, which is a positive sign for stability, the company's net income is expected to drop this year. Furthermore, the company's liquid assets exceed its short-term obligations, suggesting a degree of financial flexibility in the near term. It's also important to note that Schrodinger does not pay a dividend, which may influence the investment strategies of income-focused shareholders.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available for Schrodinger. These tips could provide further insights into the company's financial health and future prospects. To explore these insights, visit https://www.investing.com/pro/SDGR and remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. The full suite of InvestingPro products includes a number of valuable tips to help investors make informed decisions.
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