BofA Downgrades Schrodinger On Slower Drug Discovery Ramp

Schrodinger Inc (NASDAQ: SDGR) reported downbeat third-quarter results, mainly due to lower-than-expected drug discovery revenues, according to BofA Securities.

The Schrodinger Analyst: Michael Ryskin downgraded Schrodinger from Buy to Neutral and lowered the price target from $80 to $52.

The Schrodinger Takeaways: The company reduced the high-end of its fiscal 2021 guidance range for drug discovery revenues “due to delays in the timing of expected collaboration milestones,” Ryskin said in the downgrade note.

“Mgmt. noted that milestones previously expected to be recognized in FY’21 are now likely to come in FY’22 due to the timing of collaborator projects, while FY22 could be somewhat subdued as well given continued decisions to develop projects in-house internal programs,” he wrote.

“While we remain optimistic on the disruptive potential of SDGR’s technology and large market opportunity, the 3Q update shows that near-term expectations have to be reset and we see limited room for shares to outperform in coming quarters,” Ryskin further stated.

SDGR Price Action: Shares of Schrodinger were down 13.95% at $44.07 Thursday afternoon.