Cathie Wood Is Doubling Down on Recursion Pharmaceuticals Stock. Should You Buy RXRX Here?

Company Overview - Recursion Pharmaceuticals (RXRX) is a clinical-stage biotechnology company based in Salt Lake City, focusing on industrializing the drug discovery process through a combination of biological analysis, chemical expertise, advanced automation, data science, and engineering innovations [3] - The company has a market capitalization of $2.3 billion and aims to leverage cutting-edge technology and large datasets to advance medical research [3] Stock Performance - Over the past year, RXRX's stock has decreased by 37.6%, with a further decline of 9.7% in the last six months, currently trading nearly 65% below its peak of $12.36 in February [2][4] - The stock trades at approximately 37.17 times forward sales, which is a premium compared to the broader biotech sector but below its historical average, indicating tempered optimism [8] Financial Results - In Q3, Recursion reported revenue of $5.2 million, a significant drop from $26.1 million in the same quarter the previous year, missing Wall Street expectations [9] - Research and development expenses increased to $121.1 million from $74.6 million, driven by the acquisition of rights to REC-102 and the integration following a business combination with Exscientia [10] - The net loss widened to $162.3 million from $95.8 million, with a per-share loss of $0.36, which was below analyst forecasts [11] Analyst Sentiment - Analysts project revenue of approximately $61.6 million for fiscal 2025, with losses expected to narrow by 5.3% year-over-year to -$1.60 per share [13] - J.P. Morgan upgraded RXRX's stock rating to "Overweight" from "Neutral" and set a price target of $11, reflecting confidence in the company's potential [14][15] - The consensus rating for RXRX is "Moderate Buy," with an average price target suggesting a potential upside of 60.6% [16] Clinical Developments - Recent clinical trial data for REC-4881, an experimental treatment for familial adenomatous polyposis, showed meaningful efficacy, which has contributed to a shift in sentiment towards the stock [15] - The drug is viewed as having blockbuster potential, with a 60% probability of successful commercialization [15] Market Position and Future Outlook - The company is positioned at a crossroads, with improving clinical momentum, a solid cash cushion of $667.1 million as of September 30, 2025, and growing analyst support [12][17] - However, technical signals remain soft, and ongoing losses suggest a cautious approach is warranted, indicating that RXRX may not be ready for a rapid recovery yet [18]