Recursion Pharmaceuticals
RXRX
$3.50
+4.79%
Recursion Pharmaceuticals is a clinical-stage biotechnology company that leverages artificial intelligence and machine learning to decode biology and industrialize drug discovery, integrating innovations across biology, chemistry, automation, and data science. As a pioneer in AI-driven drug discovery, Recursion stands out for its proprietary platform that generates massive phenotypic datasets to identify novel drug candidates, positioning it as a disruptor in the traditionally slow and costly pharmaceutical R&D process. The current investor narrative centers on the company's potential to transform drug development through its AI platform, but it is tempered by significant skepticism regarding its unproven clinical pipeline and heavy cash burn, as highlighted by recent comparisons to more established players like Moderna and Cathie Wood's speculative bets on the stock. With a market cap around $1.8 billion and a stock that has fallen over 26% in the past year, the debate revolves around whether Recursion's technology can deliver clinical and commercial successes before its cash reserves run out.…
RXRX
Recursion Pharmaceuticals
$3.50
Related headlines
Investment Opinion: Should I buy RXRX Today?
We rate RXRX a Hold, as the stock offers significant upside potential (analyst average target $7.22, +106%) but carries substantial fundamental risks. The thesis is that the AI platform's long-term potential justifies a speculative position, but only for investors with high risk tolerance and a multi-year horizon. The consensus recommendation is Buy, but we temper this with the reality of declining revenue and negative margins.
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RXRX 12-Month Price Forecast
The AI-driven drug discovery platform has transformative potential, but current financials are weak. The stock is trading near historical lows, and analyst sentiment is bullish, but the revenue decline and cash burn are major concerns. I would upgrade to bullish if revenue growth turns positive and partnerships expand, and downgrade to bearish if cash runway shortens or clinical data disappoints.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Recursion Pharmaceuticals's 12-month outlook, with a consensus price target around $7.22 and implied upside of +106.2% versus the current price.
Average Target
$7.22
0 analysts
Implied Upside
+106.2%
vs. current price
Analyst Count
—
covering this stock
Price Range
$4 - $10
Analyst target range
Recursion has coverage from 6 analysts, with a consensus recommendation of 'Buy' and a mean recommendation score of 2.43 (where 1 is Strong Buy and 5 is Sell), indicating a moderately bullish stance. The average target price is $7.22, which implies a substantial upside of approximately 106% from the current price of $3.50, suggesting that analysts see significant value in the stock at current levels. The target price range spans from a low of $4.00 to a high of $10.00, with the low target still implying a 14% upside, reflecting a relatively narrow spread that indicates a higher conviction among analysts, though the high target assumes a successful execution of its pipeline and platform partnerships. Recent institutional ratings show a mix of Buy and Equal Weight/Neutral ratings from firms like Needham, JP Morgan, and Morgan Stanley, with JP Morgan upgrading from Neutral to Overweight in December 2025, indicating a positive shift in sentiment. The wide gap between the current price and the average target suggests that either the market is overly pessimistic about Recursion's near-term prospects, or analysts are overly optimistic, but the consistent 'Buy' ratings and recent upgrades suggest that the risk-reward is skewed to the upside for investors with a long-term horizon.
Bulls vs Bears: RXRX Investment Factors
The bull case rests on RXRX's strong cash position, AI platform potential, and analyst conviction (average target $7.22), while the bear case is driven by collapsing revenue, deep losses, and severe underperformance. Currently, the bearish evidence is stronger on a fundamental basis, as revenue decline and cash burn are immediate concerns, but the valuation near historical lows and analyst upside suggest a contrarian opportunity. The single most important tension is whether the AI platform can generate meaningful, recurring revenue before cash runs out—if partnerships materialize, the stock could re-rate sharply; if not, further dilution and downside are likely.
Bullish
- Analyst consensus Buy with 106% upside: Six analysts rate RXRX a Buy with an average target of $7.22, implying 106% upside from the current $3.50. The low target of $4.00 still offers 14% upside, and JP Morgan upgraded to Overweight in December 2025, signaling improving sentiment.
- Strong balance sheet with $660M cash: RXRX holds $660 million in cash with a current ratio of 5.50 and a debt-to-equity ratio of just 0.069. This provides a multi-year runway to fund clinical development without immediate distress, reducing near-term bankruptcy risk.
- AI platform with transformative potential: Recursion's proprietary AI-driven drug discovery platform generates massive phenotypic datasets, positioning it as a pioneer in industrializing drug R&D. Partnerships with major pharma (e.g., Roche) validate the technology, though revenue from such deals remains lumpy.
- Valuation near historical low on PS basis: The trailing PS ratio of 24.5x is near the lower end of its historical range (60.6x to 2,459x), suggesting the market has already priced in significant pessimism. Forward PS of ~7.4x based on estimated 2026 revenue of $247.5M is below the biotech industry average of 5-10x.
Bearish
- Revenue collapsing 56% YoY: Q1 2026 revenue fell to $6.47M, down 56.1% from $14.75M in Q1 2025, driven by a drop in license and service revenue. This contraction raises doubts about near-term monetization and makes the forward PS estimate of $247.5M appear overly optimistic.
- Deep losses and negative gross margin: Q1 2026 gross margin was -92.99%, and net loss was $117.5M. The company burned $325.8M in free cash flow over the TTM, and with only $660M cash, it will likely need to raise capital within two years, causing dilution.
- Stock underperforming market severely: RXRX is down 26.8% over the past year while the S&P 500 gained 20.5%, resulting in a relative strength of -47.3%. The stock trades 51% below its 52-week high of $7.18 and near its low of $2.77, reflecting persistent bearish momentum.
- Unproven pipeline and high cash burn: As a clinical-stage biotech, RXRX has no approved products, and its pipeline is early-stage. R&D spending of $87.9M in Q1 2026 continues to outpace revenue by a wide margin, and the company's ROE of -57% highlights severe shareholder value destruction.
RXRX Technical Analysis
Recursion's stock is currently in a broad downtrend, with a 1-year price change of -26.78%, significantly underperforming the S&P 500's +20.48% gain over the same period. The current price of $3.50 sits near the lower end of its 52-week range, at approximately 17% above the 52-week low of $2.77 and 51% below the 52-week high of $7.18, indicating that the stock is trading in the lower quartile of its yearly range, suggesting persistent bearish sentiment and a potential value trap or a contrarian opportunity depending on fundamental catalysts. The stock's beta of 1.054 implies it is only slightly more volatile than the broader market, but its relative strength over the past year is -47.26%, underscoring its severe underperformance and the prevailing negative momentum.
Beta
1.05
1.05x market volatility
Max Drawdown
-58.2%
Largest decline past year
52-Week Range
$3-$7
Price range past year
Annual Return
-26.8%
Cumulative gain past year
| Period | RXRX Return | S&P 500 |
|---|---|---|
| 1m | +17.4% | +3.6% |
| 3m | +16.3% | +2.7% |
| 6m | +2.3% | +11.4% |
| 1y | -26.8% | +18.7% |
| ytd | -16.7% | +12.3% |
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RXRX Fundamental Analysis
Recursion's revenue trajectory is highly erratic and currently declining, with the most recent quarter (Q1 2026) reporting revenue of $6.47 million, a 56.1% year-over-year decrease from $14.75 million in Q1 2025. This decline is driven by a sharp drop in license and service revenue, which fell to $6.30 million from $14.75 million, while grant revenue remained minimal at $0.17 million, indicating a lack of consistent commercial partnerships. The company's growth is not only decelerating but contracting, raising concerns about its ability to monetize its platform in the near term, despite its long-term potential in AI-driven drug discovery. The company remains deeply unprofitable, with a net loss of $117.5 million in Q1 2026, an EPS of -$0.22, and a gross margin of -92.99%, reflecting the high costs of its R&D and platform development. While the net loss narrowed from $202.5 million in Q1 2025, this improvement is primarily due to reduced R&D spending (down to $87.9 million from $129.6 million), not revenue growth, and the operating margin remains deeply negative at -19.86%, indicating that the company is still far from achieving profitability. Recursion's balance sheet shows a current ratio of 5.50 and a debt-to-equity ratio of 0.069, indicating strong liquidity and low leverage, but the company is burning through cash rapidly, with free cash flow of -$81.4 million in Q1 2026 and -$325.8 million over the trailing twelve months. The company's ROE is -57.01% and ROA is -27.33%, reflecting significant shareholder dilution and asset inefficiency, and while it has $660 million in cash, the ongoing cash burn suggests it will need to raise additional capital within the next two years, potentially diluting existing shareholders.
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
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Valuation Analysis: Is RXRX Overvalued?
Given that Recursion has negative net income and EBITDA, the most appropriate valuation metric is the price-to-sales (PS) ratio, as it focuses on revenue generation rather than profitability. The trailing PS ratio is 24.50x, while the forward PS ratio is not directly provided but can be inferred from the estimated revenue of $247.5 million, implying a forward PS of approximately 7.4x, which suggests the market expects significant revenue growth in the coming year. The company's EV/Sales ratio is 23.86x, and its price-to-book ratio is 1.62x, but the negative earnings and cash flow multiples (PE and PCF) are not meaningful for valuation purposes. Compared to the biotechnology industry average PS ratio of approximately 5-10x, Recursion's trailing PS of 24.50x represents a significant premium, reflecting the market's high expectations for its AI platform's future revenue potential. However, this premium is difficult to justify given the current revenue decline and lack of profitability, and it implies that the stock is priced for perfection, leaving little room for error. Historically, Recursion's PS ratio has ranged from as high as 2,459x in 2021 to as low as 60.6x in Q4 2025, with the current 24.50x being near the lower end of its historical range, suggesting that the stock is relatively cheaper than its own past valuations, but this is partly due to the recent revenue spike in Q4 2025 (which included a one-time collaboration payment) and the subsequent decline, making the current PS ratio less comparable.
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 risks are severe: RXRX has negative gross margins (-92.99% in Q1 2026), a net loss of $117.5M, and TTM free cash flow of -$325.8M. With only $660M cash, the company has roughly two years of runway at current burn rates, forcing likely capital raises that will dilute shareholders. Revenue concentration is also a risk—Q1 2026 revenue of $6.47M is heavily dependent on a few license deals, and the 56% YoY decline shows volatility. The debt-to-equity ratio is low (0.069), but the company's inability to generate positive earnings or cash flow makes it vulnerable to financing conditions.