Schrodinger (SDGR) PT Lowered to $65 as Jefferies Investors are Nervous About Guidance

Jefferies analyst Michael J. Yee lowered the price target on Schrodinger (NASDAQ: SDGR) to $65.00 (from $90.00) after Q3 revenues of $30M fell below the $32M, and software revenue of $24.3 also missed the $25.6M bogey. New 2021 guidance is $124-134M including software of $102-110M (unchanged) and drug discovery of $22-24M from prior $22-32M.

The analyst reiterated a Buy rating, stating "co has maintained guidance all year and insists the 15% midpoint revenue YY growth is still in play all year. In our conversations w/ co and in their response to our Q on the conf call, mgmt alludes to a handful of big contracts in play at year-end so the wide $8M range for Q4 is intact (although consensus is at the high end, and we are at midpt). End of the day, we have the stock at around $3.5B with $600M in cash so $2.9B of EV, or around a 20x on FY22 $125M software revs plus around $500M in drug discovery pre-clinical drug pipeline value, so it's not all super expensive at this point and momentum could come back if it puts up a strong Q4 and good 2022 guidance."

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