Schrödinger (SDGR) is back in focus after reporting second quarter 2026 results that moved from a loss to a profit, along with a new agreement to deploy its Bunsen AI co-scientist with Bristol Myers Squibb.

At a share price of $17.67, Schrödinger has seen a 43.4% 90 day share price return and a 15.3% 30 day share price return, although the 1 year total shareholder return is down 8.9%. This suggests recent momentum has picked up following the move to quarterly profitability and the expanded Bristol Myers Squibb agreement.

If the Bristol Myers Squibb partnership has put AI drug discovery back on your radar, this could be a moment to scan beyond Schrödinger and uncover 42 healthcare AI stocks

Schrödinger now trades around a 21% discount to the average analyst target and at a much steeper discount to some fair value estimates, even as profits appear only just emerging. Is the market’s caution excessive or reasonable, given the track record?

Most Popular Narrative: 15.4% Undervalued

Compared with the last close at $17.67, the most followed narrative sets Schrödinger's fair value at $20.88, which points to a valuation gap that hinges on how its software and drug discovery engines progress from here.

Increasing adoption of predictive toxicology and other AI-driven modules, as supported by FDA initiatives to modernize drug discovery and reduce reliance on animal models, is likely to deepen demand for Schrödinger's software, expanding the customer base and supporting higher SaaS recurring revenues. Ongoing improvements in the performance, usability, and accessibility of Schrödinger's proprietary software, including new streamlined workflows and expansion to non-specialist users, support broader market penetration and higher renewal or expansion rates, which can affect overall revenue and margins.

The fair value story focuses on recurring software revenue and an earnings profile that differs from current losses. Curious which revenue mix, margin path, and long-term growth assumptions are considered for Schrödinger to reach that $20.88 mark relative to the current $17.67 price? The full narrative describes those elements in detail.

Result: Fair Value of $20.88 (UNDERVALUED)

However, Schrödinger’s story can shift quickly if software growth relies too heavily on existing users or if milestone dependent drug discovery revenue proves more volatile than expected.

Another View on Schrödinger’s Valuation

The fair value narrative points to Schrödinger trading below an estimated value of $20.88 per share. Yet on a simple P/S basis the stock looks expensive at 5.1x compared with 2.9x for the US Healthcare Services industry, 1.9x for peers, and a fair ratio of 2.3x. That gap suggests investors are paying a premium for future potential, so how comfortable are you with that?

For a closer look at how these ratios relate to earnings power and growth expectations, See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

Mixed views on Schrödinger so far. If you want to move quickly and reach your own conclusion, start by weighing its 1 key reward and 2 important warning signs

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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.