Schrodinger (SDGR) Soars 12.1%: Is Further Upside Left in the Stock?

Schrodinger, Inc. SDGR shares rallied 12.1% in the last trading session to close at $23.25. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 19.3% gain over the past four weeks.

Schrodinger scored a strong price increase on investors’ optimism surrounding the formation of Tectora, a new biotechnology company it co-founded with New Enterprise Associates (NEA) and RA Capital Management. Tectora focuses on developing therapies for immunology and inflammation. Schrödinger contributed two early-stage small molecule programs and in exchange, received an equity stake in Tectora and is also eligible to receive future milestones and royalties. Tectora will partner with Schrödinger’s drug discovery experts and leverage Schrödinger’s computational platform at scale to further advance these programs to clinical candidates.  

This company is expected to post quarterly loss of $0.66 per share in its upcoming report, which represents a year-over-year change of -46.7%. Revenues are expected to be $46.02 million, down 15.3% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Schrodinger, the consensus EPS estimate for the quarter has been revised 4.1% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on SDGR going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Schrodinger is a member of the Zacks Medical Info Systems industry. One other stock in the same industry, American Well Corporation AMWL, finished the last trading session 1.4% lower at $13.67. AMWL has returned 12.4% over the past month.

For American Well, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at -$0.66. This represents a change of +62.1% from what the company reported a year ago. American Well currently has a Zacks Rank of #3 (Hold).

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This article originally published on Zacks Investment Research (zacks.com).

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