Value
6.4/10data confidence 33%| Component | Sub-score |
|---|---|
| P/S | 6.9 |
| Analyst target | 6.0 |
SDGR · Why this verdict
Why Schrodinger (SDGR) is rated SELL
Updated
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VerdictSELL
Overall score4.1/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Schrodinger's fundamental quality is deteriorating: free cash flow sits at -19% of revenue and the business has no competitive moat, both flagged as core quality concerns. Quality breakdown | FCF as a share of revenue should turn positive, or at minimum improve toward breakeven, over the next four quarters for quality concerns to ease. | →Stable |
| CounterMomentum remains comparatively strong even as fundamentals lag, suggesting the market may not yet be pricing in the cash-burn risk, leaving room for a re-rating if burn improves faster than expected. | ||
Revenue is declining at -2% year over year, undermining the growth case for the stock. Growth breakdown | Revenue growth should turn positive (above 0% YoY) within the next two quarters to reverse this trend. | →Stable |
| CounterA -2% decline is modest and could reflect a temporary software-license timing issue rather than a structural demand problem. | ||
The company has missed earnings estimates in 3 of the last 4 quarters, with an average surprise of -21.9%, reflecting a consistent pattern of underdelivery. Earnings | The beat rate should improve to at least 2 of the next 4 quarters, with average surprise moving back toward positive territory. | →Stable |
| CounterOne recent quarter did beat estimates by 23%, showing the pattern is not universal and could turn around with a single strong print. | ||
Insider activity carries a bearish signal alongside modest insider selling of $1.07M, while short interest sits at an elevated 24% of float. Insider | The insider signal should shift to neutral or bullish, and short interest should decline below 15%, for bearish positioning to ease. | →Stable |
| CounterThe insider selling is characterized as modest at only 0.085% of market cap, which may not be a meaningful signal of insider conviction either way. | ||
Despite weak fundamentals, price momentum remains comparatively strong at 6.9/10, with rising on-balance volume suggesting some buying interest persists. Momentum breakdown | Momentum should stay above 6.0 and OBV should continue rising over the next quarter to sustain this divergence from fundamentals. | →Stable |
| CounterThe engine flags a death-cross warning even as momentum recovers, and momentum-driven strength unsupported by fundamentals is often the first thing to break down when sentiment shifts. | ||
Schrodinger's fundamental quality is deteriorating: free cash flow sits at -19% of revenue and the business has no competitive moat, both flagged as core quality concerns.
→StableQuality breakdown
- Expectation
- FCF as a share of revenue should turn positive, or at minimum improve toward breakeven, over the next four quarters for quality concerns to ease.
CounterMomentum remains comparatively strong even as fundamentals lag, suggesting the market may not yet be pricing in the cash-burn risk, leaving room for a re-rating if burn improves faster than expected.
Revenue is declining at -2% year over year, undermining the growth case for the stock.
→StableGrowth breakdown
- Expectation
- Revenue growth should turn positive (above 0% YoY) within the next two quarters to reverse this trend.
CounterA -2% decline is modest and could reflect a temporary software-license timing issue rather than a structural demand problem.
The company has missed earnings estimates in 3 of the last 4 quarters, with an average surprise of -21.9%, reflecting a consistent pattern of underdelivery.
→StableEarnings
- Expectation
- The beat rate should improve to at least 2 of the next 4 quarters, with average surprise moving back toward positive territory.
CounterOne recent quarter did beat estimates by 23%, showing the pattern is not universal and could turn around with a single strong print.
Insider activity carries a bearish signal alongside modest insider selling of $1.07M, while short interest sits at an elevated 24% of float.
→StableInsider
- Expectation
- The insider signal should shift to neutral or bullish, and short interest should decline below 15%, for bearish positioning to ease.
CounterThe insider selling is characterized as modest at only 0.085% of market cap, which may not be a meaningful signal of insider conviction either way.
Despite weak fundamentals, price momentum remains comparatively strong at 6.9/10, with rising on-balance volume suggesting some buying interest persists.
→StableMomentum breakdown
- Expectation
- Momentum should stay above 6.0 and OBV should continue rising over the next quarter to sustain this divergence from fundamentals.
CounterThe engine flags a death-cross warning even as momentum recovers, and momentum-driven strength unsupported by fundamentals is often the first thing to break down when sentiment shifts.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Schrodinger shows deteriorating fundamental quality — cash burn, no moat, declining revenue, and a consistent earnings-miss pattern — that keeps it below the investment quality floor, even though price momentum and rising volume have shown some resilience a bull case could point to.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
2.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.0 |
| Gross margin | 7.1 |
| Op margin | 0.0 |
| Net margin | 0.0 |
| Current ratio | 9.2 |
| FCF quality | 0.0 |
| Moat | 4.8 |
| Piotroski F | 4.4 |
- ▸Cash-burning: FCF -19% of revenue
- ▸No competitive moat
- ▸Quality concerns
Growth
2.1/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 2.1 |
- ▸Declining revenue: -2%
Momentum
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 8.1 |
| OBV | 10.0 |
| MA position | 8.0 |
| Volume | 1.1 |
- ▸Overbought (RSI 70)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.8 |
| Analyst rating | 7.9 |
| Price target | 8.0 |
- ▸Light analyst coverage (8.0) — signal dampened
- ▸Analyst upside: 23%
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Modest insider selling — $1,065,935 (0.085% of mkt cap)
Peer rank
1.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.3 |
| quality rank | 1.4 |
| growth rank | 1.3 |
Technical
2.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.3 |
| support resistance | 2.1 |
| 52w position | 2.3 |
| gap | 6.0 |
Risk (lower is worse)
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 1.1 |
| days to cover | 2.7 |
| volatility | 0.0 |
| put call | 10.0 |
| implied vol | 0.0 |
| max pain risk | 3.0 |
| beta | 4.6 |
| debt equity | 8.6 |
- ▸High short interest justified: 24%
- ▸High IV: 117%
- ▸Above max pain $2
Catalyst
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| news activity | 7.0 |
- ▸Earnings concerns: 1B/3M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- MOMENTUM:6.3>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:31d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.5<1.5@spot
Warning (2)
- DEATH_CROSS:momentum=6.3>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.46
Upside
+6.8%
Downside
15.0%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 70
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.62>1.3, MCap $1.3B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Sentiment at 7.2 could not lift the engine output above the verdict floor. Failed gate signal: ASYMMETRY:0.5<1.5@spot.
The strongest dimensions are Sentiment at 7.2, Value at 6.4, and Momentum at 6.3; the weakest are Peer rank at 1.5, Growth at 2.1, and Quality at 2.8. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of 0.46 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Deteriorating Quality Cash Burn
Trip ifFCF as a percent of revenue falls below -30% (worse than the current -19%), or moat score stays below 5 for 2 consecutive quarters.
- P2Declining Revenue Trend
Trip ifRevenue growth falls below -10% YoY, worse than the current -2%.
- P3Earnings Miss Pattern
Trip ifThe company misses earnings estimates in 2 more consecutive quarters, pushing the trailing beat rate below 25%.
- P4Bearish Insider And Short Interest Signal
Trip ifShort interest rises above 30% from the current 24%, or insider net selling exceeds $2,000,000 over a 90-day period.
- P5Resilient Price Momentum Despite Weak Fundamentals
Trip ifMomentum score falls below 5.0 from the current 6.9, or on-balance volume turns negative for 2 consecutive months.