With the business potentially at an important milestone, we thought we'd take a closer look at Schrödinger, Inc.'s (NASDAQ:SDGR) future prospects. Schrödinger, Inc. provides physics-based software platform that enables discovery of novel molecules for drug development and materials applications. With the latest financial year loss of US$24m and a trailing-twelve-month loss of US$11m, the US$5.5b market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Schrödinger's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Schrödinger

Schrödinger is bordering on breakeven, according to the 5 American Healthcare Services analysts. They expect the company to post a final loss in 2022, before turning a profit of US$44m in 2023. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 64% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Schrödinger's growth isn’t the focus of this broad overview, but, keep in mind that generally healthcare tech companies, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before we wrap up, there’s one aspect worth mentioning. Schrödinger currently has no debt on its balance sheet, which is quite unusual for a cash-burning healthcare tech company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

This article is not intended to be a comprehensive analysis on Schrödinger, so if you are interested in understanding the company at a deeper level, take a look at Schrödinger's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should look at:

1. Valuation: What is Schrödinger worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Schrödinger is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Schrödinger’s board and the CEO’s background.

3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

This article by Simply Wall St is general in nature. 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.

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