Recent attention on Recursion Pharmaceuticals (RXRX) has been driven by upbeat analyst commentary, insider share purchases, and focus on its AI platform partnership with Nvidia, all ahead of an earnings report that many investors are watching closely.

That backdrop of insider buying, analyst optimism and Nvidia aligned AI work sits against a mixed share price story, with a 7.5% 1 month share price return and a 35.47% 1 year total shareholder return loss, suggesting short term momentum but still weak longer term performance.

If you are watching how AI is reshaping drug discovery, it can be useful to scan a wider set of opportunities through healthcare stocks as a next step.

With the shares down 35.47% over the past year but trading at roughly a 48% discount to analyst targets and a similar implied intrinsic discount, the key question is simple: is Recursion undervalued here, or is the market already pricing in its future growth?

Most Popular Narrative: 62.1% Undervalued

According to the most followed narrative, Recursion Pharmaceuticals' fair value sits at $12.49 per share versus the last close of $4.73, pointing to a sizeable valuation gap that hinges on how its platform and pipeline convert into cash flows.

Recursion Pharmaceuticals is currently at a critical inflection point. For years, the company was viewed as a "science project", a high-tech platform promising to revolutionize drug discovery with AI. However, the Q3 2025 results and recent pipeline updates have fundamentally shifted the narrative. With validated clinical data, significant milestone payments from partners like Roche, and a cash runway extending through 2027, Recursion is transitioning into a commercial-stage TechBio leader.

The fair value in this narrative leans heavily on how fast revenue could ramp and what kind of margins a scaled platform might reach. The author also builds in a premium valuation multiple that is more often associated with mature high growth platforms than early stage biotechs. Curious what combination of growth, profitability and valuation multiple needs to hold for $12.49 to make sense?

Result: Fair Value of $12.49 (UNDERVALUED)

However, this bullish setup still depends on unproven long-term profitability and successful late-stage trial outcomes; either factor could quickly challenge the $12.49 view.

Build Your Own Recursion Pharmaceuticals Narrative

If you look at this and feel the assumptions do not quite fit your view, you can stress test the same data yourself and build a tailored thesis in just a few minutes with Do it your way

A great starting point for your Recursion Pharmaceuticals research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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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.