Recursion Pharmaceuticals
RXRX
$3.02
-8.76%
Recursion Pharmaceuticals is a clinical-stage biotechnology company that integrates technological innovations across biology, chemistry, automation, data science, and engineering to industrialize drug discovery. It operates as a distinct player in the AI-driven drug discovery space, leveraging a proprietary platform to decode biology and identify novel therapeutic candidates. The current investor narrative centers on the company's potential to transform drug development through artificial intelligence, though this is tempered by skepticism over its unproven clinical pipeline and persistent operating losses. Recent news highlights debates about Recursion's speculative nature compared to more established biotech peers, with Cathie Wood's ARK Invest adding to positions amid a beaten-down stock price.…
RXRX
Recursion Pharmaceuticals
$3.02
Related headlines
Investment Opinion: Should I buy RXRX Today?
Rating: Hold. Recursion is a speculative clinical-stage biotech with a promising AI platform but deteriorating fundamentals. The analyst consensus is Buy with an average target of $7.25, but the stock's poor price performance and negative margins warrant caution. The thesis is that the current price already reflects significant pessimism, but a turnaround requires concrete pipeline catalysts that are uncertain.
Supporting evidence: The trailing PS ratio of 24.50x is high but below its historical average, and the forward PS of 7.40x implies expected revenue growth that has not materialized. Revenue declined 56% YoY, gross margin is -92.99%, and free cash flow is deeply negative. However, the company has $660 million cash and low debt, providing a buffer. The 119% upside to the average analyst target suggests value if the pipeline succeeds, but the lack of revenue growth and profitability makes the stock a high-risk bet.
Risks & Conditions: The biggest risks are continued cash burn requiring dilution, failure of clinical trials, and inability to grow revenue. This Hold would upgrade to Buy if the company announces a major partnership or positive Phase 2 data that validates the platform, or if the stock drops below $2.50, offering a wider margin of safety. It would downgrade to Sell if cash burn accelerates or revenue continues to decline. Overall, RXRX is overvalued relative to current fundamentals but may be fairly valued if one assigns a high probability to future pipeline success.
Sign up to view all
RXRX 12-Month Price Forecast
Recursion's outlook over the next 12 months is highly uncertain, with a wide range of outcomes. The base case of a range-bound stock between $4 and $7.25 is most likely, given the lack of near-term catalysts and persistent fundamental weaknesses. The bull case (20% probability) requires a transformative event like positive clinical data or a partnership, while the bear case (30% probability) could materialize if the pipeline disappoints. The neutral stance reflects the balance between deep value potential and significant operational risks. An upgrade to bullish would require tangible evidence of revenue growth or clinical success; a downgrade to bearish would follow a failed trial or accelerated cash burn.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Recursion Pharmaceuticals's 12-month outlook, with a consensus price target around $7.25 and implied upside of +140.1% versus the current price.
Average Target
$7.25
0 analysts
Implied Upside
+140.1%
vs. current price
Analyst Count
—
covering this stock
Price Range
$4 - $10
Analyst target range
Six analysts cover Recursion, with a consensus recommendation of 'Buy' and an average target price of $7.25. The current price of $3.31 implies 119% upside to the average target, indicating strong bullish sentiment. The distribution shows no sell ratings, with firms like Needham and JP Morgan maintaining Buy/Overweight ratings. The high target of $10.00 assumes successful pipeline advancement and potential partnership or acquisition value, while the low target of $4.00 reflects a more conservative view with limited upside. The wide spread between low and high targets ($4.00 to $10.00) signals high uncertainty about the company's future. Recent ratings actions show stability, with Morgan Stanley maintaining Equal Weight and Needham reiterating Buy, suggesting analysts are waiting for clinical catalysts before adjusting views. The bullish consensus is notable given the stock's poor price performance, indicating that analysts see significant value at current levels if the AI platform delivers.
Bulls vs Bears: RXRX Investment Factors
Recursion Pharmaceuticals presents a high-risk, high-reward profile typical of clinical-stage biotechs. The bull case rests on a strong cash position, low debt, analyst optimism with 119% upside, and potential for a short squeeze. However, the bear case is equally compelling: declining revenue, deeply negative gross margins, massive cash burn, and a premium valuation that is difficult to justify without proven commercial success. The single most important tension is whether Recursion's AI platform can deliver clinical and regulatory milestones that validate its technology and reverse the revenue decline. Currently, the bearish evidence from deteriorating fundamentals outweighs the bullish narrative, making the stock a speculative hold rather than a clear buy.
Bullish
- Strong Cash Position: Recursion has $660 million in cash with a current ratio of 5.50, providing a substantial liquidity cushion to fund operations and pipeline development for several years without immediate financing pressure.
- Analyst Consensus Buy with 119% Upside: Six analysts rate RXRX a Buy with an average target of $7.25, implying 119% upside from the current price of $3.31. No sell ratings exist, indicating strong conviction among covering analysts.
- Low Debt and Improving Losses: Debt-to-equity is only 0.069, and net loss narrowed from $202.5 million in Q1 2025 to $117.5 million in Q1 2026, showing progress in cost management and operational efficiency.
- Potential Short Squeeze Catalyst: Short ratio of 7.99 days to cover is extremely high, indicating heavy bearish positioning. Any positive catalyst could trigger a sharp squeeze, as seen in the 60.79% one-month rally.
Bearish
- Declining and Erratic Revenue: Revenue fell 56.11% year-over-year in Q1 2026 to $6.47 million, with no sustainable growth trend. The company relies on unpredictable license and service revenue, not product sales.
- Deeply Negative Gross Margin: Gross margin was -92.99% in Q1 2026, meaning revenue does not cover direct costs. This is unsustainable and indicates the business model is not yet viable.
- Massive Cash Burn: Free cash flow was -$81.4 million in Q1 2026 and -$325.8 million TTM. Despite $660 million cash, the burn rate implies roughly 2 years of runway, requiring future dilution.
- Speculative Valuation on Weak Fundamentals: Trailing PS ratio of 24.50x is a premium to biotech peers (5-10x), yet revenue is declining. The valuation relies on future pipeline success, not current performance.
RXRX Technical Analysis
Recursion is in a sustained downtrend, with the stock price declining 36.59% over the past year. The current price of $3.31 sits at 12.9% of its 52-week range ($2.77 low to $7.18 high), indicating it is trading near the bottom of its range. This positioning suggests the stock is deeply oversold and potentially offering a value opportunity, but also reflects persistent selling pressure and a lack of bullish catalysts. The 1-month price change of +60.79% shows a sharp short-term bounce, while the 3-month change of -8.06% indicates that the longer-term trend remains bearish. This divergence—a strong one-month rally within a three-month decline—could signal a temporary mean-reversion bounce rather than a sustainable trend reversal. The 1-year relative strength vs. SPY is -57.51%, confirming severe underperformance. The 52-week low of $2.77 provides key support, while the 52-week high of $7.18 is the major resistance. A breakout above $7.18 would signal a potential trend reversal, while a breakdown below $2.77 could accelerate selling. Beta of 0.995 indicates volatility roughly in line with the market, meaning the stock's moves are not amplified relative to SPY, but its high short ratio of 7.99 suggests significant bearish sentiment and potential for short squeezes.
Beta
0.99
0.99x market volatility
Max Drawdown
-58.2%
Largest decline past year
52-Week Range
$3-$7
Price range past year
Annual Return
-44.0%
Cumulative gain past year
| Period | RXRX Return | S&P 500 |
|---|---|---|
| 1m | -5.0% | +0.1% |
| 3m | -20.1% | +5.7% |
| 6m | -35.3% | +8.5% |
| 1y | -44.0% | +20.3% |
| ytd | -28.1% | +10.1% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
RXRX Fundamental Analysis
Revenue trajectory is highly erratic and declining, with Q1 2026 revenue of $6.47 million down 56.11% year-over-year from $14.75 million in Q1 2025. The multi-quarter trend shows revenue swinging wildly from $4.51 million (Q4 2024) to $26.08 million (Q3 2024) to $6.47 million (Q1 2026), indicating no sustainable growth. The company relies on license and service revenue ($6.30 million in Q1 2026) and small grant revenue ($0.17 million), with no approved products generating consistent sales. This revenue instability makes the investment case highly dependent on pipeline success rather than commercial execution. The company is deeply unprofitable, with a net loss of $117.5 million in Q1 2026 and a negative gross margin of -92.99%. Operating margin is -19.86%, and net margin is -18.16%, reflecting heavy R&D spending ($87.9 million in Q1 2026) and SG&A costs ($34.6 million). While losses are narrowing from $202.5 million in Q1 2025, the company remains far from profitability, and negative gross margins indicate that revenue does not cover direct costs. Balance sheet shows a current ratio of 5.50 and cash of $660 million, providing a liquidity cushion. Debt-to-equity is low at 0.069, but the company is burning cash heavily, with free cash flow of -$81.4 million in Q1 2026 and -$325.8 million over the trailing twelve months. ROE is -57.01%, reflecting severe shareholder value destruction. The company relies on equity offerings (e.g., $254.5 million from stock issuance in Q3 2025) to fund operations, indicating dependence on external financing.
Quarterly Revenue
$6472000.0B
2026-03
Revenue YoY Growth
-56.1%
YoY Comparison
Gross Margin
-93.0%
Latest Quarter
Free Cash Flow
$-325847000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
Open an Account, get $2 TSLA now!
Valuation Analysis: Is RXRX Overvalued?
Since net income is negative, the price-to-sales (PS) ratio is the primary valuation metric. The trailing PS ratio is 24.50x, while forward PS (based on estimated revenue of $247.5 million) is approximately 7.40x. The large gap between trailing and forward PS implies the market expects significant revenue growth, though the company's recent revenue decline contradicts this optimism. Compared to the biotechnology industry average PS ratio (typically 5-10x for clinical-stage biotechs), Recursion's trailing PS of 24.50x represents a significant premium. This premium may be justified by the company's AI platform and potential for high-margin drug discoveries, but the lack of revenue growth and persistent losses make the valuation difficult to defend. Historically, Recursion's PS ratio has ranged from 105x (Q1 2023) to 2,459x (Q2 2021), with the current 24.50x near the lower end of its historical band. This suggests the stock is relatively cheap compared to its own history, but the historical highs were driven by speculative fervor during the SPAC boom. The current lower multiple reflects deteriorating fundamentals and waning investor enthusiasm.
PE
-2.8x
Latest Quarter
vs. Historical
N/A
5-Year PE Range 17x~59x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
-2.1x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: Recursion's primary financial risk is its unsustainable cash burn rate. With free cash flow of -$325.8 million TTM and only $660 million in cash, the company has roughly two years of runway before needing to raise capital, likely through dilutive equity offerings. The negative gross margin of -92.99% indicates that the core business model is not viable at scale, and revenue is highly erratic, swinging from $26.08 million in Q3 2024 to $6.47 million in Q1 2026. This lack of revenue visibility makes it impossible to project when the company might achieve profitability, and any delay in pipeline progress could accelerate cash depletion.
Market & Competitive Risks: The stock trades at a trailing PS ratio of 24.50x, a significant premium to the biotech industry average of 5-10x, leaving it vulnerable to valuation compression if sentiment shifts. With a beta of 0.995, the stock moves in line with the market, but its high short ratio of 7.99 indicates extreme bearish sentiment that could lead to violent squeezes or further declines. Competitive risks include the emergence of other AI-driven drug discovery platforms that could erode Recursion's first-mover advantage. Recent news highlights skepticism about its unproven approach compared to more established biotech firms like Moderna.
Worst-Case Scenario: If Recursion fails to deliver positive clinical data or secure a major partnership, the stock could fall to its 52-week low of $2.77, representing a 16.3% decline from the current price of $3.31. In a more severe scenario, if cash burn accelerates and dilution becomes necessary, the stock could drop below $2.00, implying a loss of 40% or more. The historical max drawdown of -58.17% from the 52-week high of $7.18 to the low of $2.77 illustrates the potential downside. An investor could lose up to 58% from the high, and from current levels, a realistic worst-case loss is 35-40% if clinical trials fail.
FAQ
The key risks are: (1) Financial risk: cash burn of $325.8 million TTM with only $660 million cash, requiring future dilution; (2) Operational risk: negative gross margin of -92.99% and declining revenue; (3) Clinical risk: pipeline failure could destroy value; (4) Valuation risk: premium PS ratio leaves stock vulnerable to multiple compression. The most severe risk is a failed clinical trial, which could send the stock below $2.77.
The 12-month forecast is highly uncertain. The bull case (20% probability) targets $7.18-$10.00, driven by positive clinical data or a partnership. The base case (50% probability) sees the stock trading between $4.00 and $7.25, with no major catalysts. The bear case (30% probability) targets $2.77-$4.00, if trials fail or revenue declines further. The most likely scenario is the base case, with the stock remaining range-bound until clearer pipeline data emerges.
RXRX appears overvalued based on trailing fundamentals, with a PS ratio of 24.50x versus the biotech industry average of 5-10x. However, the forward PS ratio of 7.40x is more in line with peers if the estimated revenue of $247.5 million is achieved. The stock is trading near the lower end of its historical PS range (which peaked at 2,459x), suggesting it is relatively cheap compared to its own history. The market is pricing in significant future growth, which has not yet materialized. Given the revenue decline, the current valuation is difficult to justify without a catalyst.
RXRX is a high-risk, high-reward speculative buy for investors with a long-term horizon and high risk tolerance. The stock offers 119% upside to the average analyst target of $7.25, but this is contingent on successful pipeline development and revenue growth. The biggest downside risk is a clinical trial failure or continued cash burn leading to dilution. For conservative investors, it is not a good buy due to negative gross margins and declining revenue. However, for those willing to bet on the AI platform's potential, the current price near the 52-week low may offer a compelling entry point if catalysts materialize.
RXRX is more suitable for long-term investment (3-5 years) given its clinical-stage nature and dependence on pipeline milestones. Short-term trading is risky due to high volatility (beta ~1) and the stock's downtrend, though the high short ratio of 7.99 could lead to short-term squeezes. The company has a 2-year cash runway, providing some buffer for long-term holders. A minimum holding period of 2-3 years is recommended to allow for clinical data readouts and potential commercialization.