• If you are wondering whether Recursion Pharmaceuticals' current share price makes sense, the key question is how that price compares with what the business could reasonably be worth.
• The stock last closed at US$3.67, with a 7 day return of 7.3%, a 30 day return decline of 12.4%, a year to date return decline of 12.6%, and a 1 year return decline of 51.1%. These figures will shape how many investors think about its potential and risk today.
• Recent coverage has focused on Recursion Pharmaceuticals as an AI driven drug discovery name and has highlighted its role in the broader discussion around data rich biotech platforms. This context helps explain why the share price can be sensitive to sentiment around AI related spending and appetite for early stage biotech exposure.
• On our simple valuation checklist Recursion Pharmaceuticals scores 2 out of 6 on undervaluation tests, giving it a value score of 2. Next we will walk through what different valuation approaches say about that number before finishing with a framework that can help you make more sense of it.

Recursion Pharmaceuticals scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Recursion Pharmaceuticals Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model looks at the cash a company is expected to generate in the future, then discounts those projected cash flows back to today to estimate what the business might be worth right now.

For Recursion Pharmaceuticals, the model used is a 2 Stage Free Cash Flow to Equity DCF. The latest twelve month free cash flow is a loss of $387.8 million. Analysts and extrapolated estimates point to free cash flow turning positive over time, with projected free cash flow of $176 million in 2030, and a series of annual projections between 2026 and 2035 that shift from losses to positive cash generation.

Based on these cash flow projections, Simply Wall St estimates an intrinsic value of about $9.50 per share. Compared with the recent share price of $3.67, the DCF output suggests the stock is 61.4% undervalued according to this framework.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Recursion Pharmaceuticals is undervalued by 61.4%. Track this in your watchlist or portfolio, or discover 46 more high quality undervalued stocks.

Approach 2: Recursion Pharmaceuticals Price vs Sales

For many profitable companies investors often look at earnings based metrics like the P/E ratio, but when profits are limited or volatile, revenue can be a cleaner anchor. This is where the price to sales, or P/S, ratio comes in.

What counts as a reasonable P/S multiple usually depends on how quickly investors expect revenue to grow and how much risk they see in the business model. Higher growth and lower perceived risk tend to support higher P/S levels, while slower growth or higher uncertainty often line up with lower multiples.

Recursion Pharmaceuticals currently trades on a P/S ratio of 26x. That sits above the Biotechs industry average P/S of 12.52x and above its peer group average of 9.02x. Simply Wall St also calculates a proprietary “Fair Ratio” for the P/S multiple, which comes out at 0.00x for Recursion Pharmaceuticals. This Fair Ratio is designed to be more tailored than a simple industry or peer comparison because it incorporates factors like earnings growth, risk profile, profit margins, industry, and market capitalization.

Comparing the current P/S of 26x with the Fair Ratio of 0.00x points to Recursion Pharmaceuticals screening as expensive on this metric.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Recursion Pharmaceuticals Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply your own story about a company linked directly to your assumptions for future revenue, earnings, margins and a fair value estimate.

On Simply Wall St, Narratives live in the Community page and give you a simple framework. You spell out what you think is happening with a business, connect that story to a financial forecast, and the platform turns it into a fair value that you can line up against the current share price to help you decide if it looks like a potential buy, hold, or sell for your portfolio.

Because Narratives on the platform are updated when new information like news or earnings is added, they can move quickly with the story rather than staying frozen in a one off model.

With Recursion Pharmaceuticals, for example, one investor Narrative on the Community page currently anchors on a fair value of about US$1.97 per share, while a more optimistic Narrative points to about US$11.00 per share. This shows how different stories and assumptions about the same company can translate into very different fair values that you can compare with today’s market price.

For Recursion Pharmaceuticals however, we will make it really easy for you with previews of two leading Recursion Pharmaceuticals Narratives:

Narrative fair value: US$7.00 per share

Implied discount to this fair value: 47.6% below the narrative fair value

Assumed annual revenue growth: 70.96%

• Analysts describe Recursion OS, AI tools and large proprietary datasets as important for faster, more efficient drug discovery and potential future margins.
• The thesis focuses on collaboration revenue from big pharma and progress in internal programs such as oncology and rare disease trials, including FAP.
• Risks include partner dependence, a cash-burning profile with a finite runway, competitive pressure in AI biotech and potential regulatory headwinds for AI in healthcare.

Narrative fair value: US$1.97 per share

Implied premium to this fair value: 86.3% above the narrative fair value

Assumed annual revenue growth: 52.84%

• This view argues that heavy insider selling signals low internal confidence in the business.
• The author highlights the past share price fall from above US$40 to below US$4 as evidence that prior optimism has not been rewarded so far.
• The narrative is skeptical of execution and the lack of approved drugs to date, describing Recursion as a high risk biotech investment.

Taken together, these Narratives describe a wide valuation range for Recursion Pharmaceuticals. Your next step is to decide which story, assumptions and risk balance are closer to your own view of the company.

Do you think there's more to the story for Recursion Pharmaceuticals? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.