Value
7.4/10data confidence 33%| Component | Sub-score |
|---|---|
| P/S | 7.3 |
| Analyst target | 7.5 |
- ▸Attractively valued
SDGR · Why this verdict
Why Schrodinger (SDGR) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.3/10
ConfidenceMEDIUM
MacroNEUTRAL
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.
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. | Tripped→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. | ↑Improving |
| 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. | ↓Deteriorating |
| 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.
Tripped→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.
↑ImprovingInsider
- 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.
↓DeterioratingMomentum 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.
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
1.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 3.0 |
| Volume | 0.0 |
- ▸Capitulation risk (RSI 29, below 200MA)
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -3.5%/30d — confirmed downtrend
Sentiment
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.7 |
| Price target | 8.9 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (7.0) — signal dampened
- ▸Analyst upside: 36%
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
2.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.8 |
| quality rank | 1.4 |
| growth rank | 1.3 |
Technical
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.4 |
| support resistance | 8.4 |
| 52w position | 2.8 |
| gap | 6.0 |
Risk (lower is worse)
2.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 1.0 |
| days to cover | 3.5 |
| volatility | 0.5 |
| put call | 0.0 |
| implied vol | 0.0 |
| beta | 4.6 |
| debt equity | 8.6 |
- ▸High short interest justified: 25%
- ▸Elevated put/call: 8.00
- ▸High IV: 87%
Catalyst
2.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
- ▸Earnings concerns: 1B/3M
- ▸Earnings in 13 days
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (5)
- ASYMMETRY:1.9>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:1.4<4.5
- DEATH_CROSS:HARD_BLOCK
Warning (2)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
- EARNINGS_PROXIMITY:13d<=14d (soft)
Reward-to-Risk
1.88
Upside
+18.0%
Downside
9.6%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeInst Constrain — Small cap ($1.1B) below institutional reach
SuitabilityAggressive — Beta 1.62>1.3, MCap $1.1B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the MOMENTUM gate's 1.4<4.5 outcome against Value at 7.4 and asymmetric R:R of 1.88.
The strongest dimensions are Value at 7.4, Insider at 7.3, and Sentiment at 7.0; the weakest are Momentum at 1.4, Growth at 2.1, and Catalyst at 2.5. The V9 engine flagged 2 failed gates with 2 warnings, producing an asymmetric reward-to-risk of 1.88 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 TrendTripped
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.