SDGR · Schrodinger, Inc.

The thesis

Schrödinger's shares are more likely to lag the S&P 500 than lead it until reported software revenue catches up with the 27% growth in software contracts. The third-quarter report decides it. The company had not confirmed a date as of 15 October 2026. Third-party calendars place it between 4 November 2026 and 9 November 2026.

Two analyst target raises have the shares up. BMO Capital analyst Gary Nachman kept an Outperform rating and raised his target to $30 from $24 on 12 October 2026 (GuruFocus). TD Cowen kept a Buy rating and raised its target to $31 from $20 on 13 October 2026 (Benzinga). The shares closed at $25.89 on 13 October 2026 and at $25.05 on 14 October 2026. That last close is 23.2% below the $32.60 52-week closing high of 5 October 2026 (adjusted daily closes).

The newest business figures are still from 5 August 2026. Second-quarter annual contract value (ACV) grew 27% while reported software revenue fell about 10% (Q2 2026 results, Form 8-K Exhibit 99.1). The narrative is maturing: the artificial-intelligence (AI) drug-discovery story is well known, and the shares kept falling after the two raises on 12 October 2026 and 13 October 2026, extending a slide that began with an 11.3% drop on 6 October 2026 (GuruFocus).

Bullish and bearish views on Schrodinger, Inc.

The bull case on Schrodinger, Inc. (SDGR), in brief: Two firms target well above the price. The bear case: The consensus target sits below the price.

Bull case

• Two firms target well above the price. BMO's $30 and TD Cowen's $31 targets, set on 12 October 2026 and 13 October 2026, both sit above the $25.05 close on 14 October 2026. Both firms raised after the summer rally, so part of the sell side is now moving toward the price.
• Contract growth runs ahead of revenue. ACV was $29.6 million in Q2 2026, up 27% year over year. Full-year ACV guidance of $218–228 million implies 10–15% growth (Q2 results, 5 August 2026).
• A large drugmaker anchors Bunsen. Bristol Myers Squibb agreed on 5 August 2026 to deploy Bunsen, the company's AI research assistant, across its research organization. The contract value was not disclosed.
• Drug-discovery guidance moved up. Full-year drug-discovery revenue guidance rose to $65–75 million from $55–65 million, helped by a $10 million milestone tied to Ajax Therapeutics (Q2 results, 5 August 2026).

• Outside investors fund contributed programs. Tectora Therapeutics raised a $55 million Series A from New Enterprise Associates and RA Capital Management on 9 September 2026. Schrödinger holds equity, milestones and royalties on the programs it contributed.

Bear case

• The consensus target sits below the price. MarketBeat listed a $20.80 consensus target from 6 analysts, a $17–$24 range and a Hold consensus on 6 October 2026, before the BMO and TD Cowen raises.
• Valuation models still read the shares as rich. GuruFocus put its GF Value at $24.05 on 12 October 2026 and called the shares 7.7% overvalued at $25.91.
• Software revenue has not confirmed the contracts. Reported software revenue fell about 10% year over year in Q2 2026 while ACV rose 27%. The company attributes the gap to hosted contracts that recognise revenue over time (Q2 results).
• Q2 profit leaned on an investment gain. Net income of $6.0 million included about $45.9 million from Eli Lilly's acquisition of Ajax Therapeutics, against a $43.2 million net loss a year earlier (Q2 results).
• GuruFocus counted $941,713 of insider selling over three months and no insider buying, as of 12 October 2026.

Price setup

The shares rose 63.5% over the three months to 14 October 2026 and peaked at a $32.60 close on 5 October 2026 (adjusted daily closes). Since then they have given back part of the gain. The close of $25.05 on 14 October 2026 is 23.2% below that high.

The 14-day relative strength index (RSI), a momentum gauge running from 0 to 100, stood at 35.5 on 14 October 2026. That reading shows selling pressure close to the oversold zone below 30, with no sign yet of a turn. The $24 area matters: GuruFocus's GF Value is $24.05, and $24 was the top of MarketBeat's analyst target range on 6 October 2026.

Crowding is visible on the sell side of the ledger. Insiders sold during the September rally, and the two target raises came after the peak. The quarterly report lands within the next 30 days, so the shares are likely to trade on results rather than on analyst notes.

Catalysts, next 30 days

• ~21 October 2026, est.: announcement of the Q3 2026 results date. The Q3 2025 date was announced on 22 October 2025. It confirms when the test of the gap between ACV and reported software revenue arrives.
• ~4 November 2026, est.: Q3 2026 financial results. The Q3 2025 report came on 5 November 2025. Earnings Whispers lists 9 November 2026 after the close; the company had not confirmed either date as of 15 October 2026. The report shows whether software revenue returns to year-over-year growth and whether the $218–228 million ACV guide holds without Ajax-related gains.

What would change the view

The case for lagging the index breaks if the Q3 report shows reported software revenue growing year over year, the ACV guide holding or rising, and a second named enterprise customer for Bunsen. That combination would show the contract growth turning into revenue and would make the higher BMO and TD Cowen targets the better guide.

The case is also wrong on the downside if the shares close below $24. That would put them under GuruFocus's $24.05 GF Value and the top of the pre-rally analyst target range, and the question of whether they lead or lag the index would then be settled. A Q3 report with software revenue down again, or a cut to the $218–228 million ACV guide, would end the contract-growth argument entirely.

What it trades with

The shares trade with AI drug-discovery and precision-biotech names such as Recursion Pharmaceuticals, a group that includes Kodiak Sciences, Iovance, Moderna, Novavax, ImmunityBio and Halozyme. The group heated up again in mid-October 2026 while Schrödinger fell, so its recent weakness looks specific to the company. A broad biotech rally lifted the shares on 17 September 2026 (Benzinga). Large one-time gains from co-founded biotechs, such as the Ajax acquisition, move reported earnings independently of the software business.