BofA Upgrades Schrödinger (SDGR) to Buy After Strategic Pivot to Software

Core Insights - Schrödinger, Inc. (NASDAQ:SDGR) has been upgraded by BofA Securities from Neutral to Buy, with a price target of $24, due to a strategic pivot towards its core software business, which is expected to lead to stronger and more predictable growth [1][2] - The shift to a software-focused model is seen as a cleaner and more streamlined approach, reducing complexity and cash burn associated with clinical programs, positioning the company to better leverage the demand for advanced computational tools in pharmaceutical research [2] Company Strategy - KeyBanc has reiterated an Overweight rating on Schrödinger with a price target of $28, following discussions with the company's management, highlighting a turnaround as resources are redirected towards high-margin software operations [3] - Management emphasized product expansions and long-term growth potential during a non-deal roadshow, indicating a positive outlook for the company's future [3] Valuation and Market Position - KeyBanc views Schrödinger's stock as undervalued, trading at approximately three times the 2026 consensus revenue estimates, presenting an attractive opportunity for healthcare technology investors [4] - Schrödinger develops computational platforms for drug discovery, utilizing physics-based molecular modeling combined with AI to accelerate pharmaceutical research [4]