BofA Upgrades Schrödinger (SDGR) to Buy After Strategic Pivot to Software

Schrödinger, Inc. (NASDAQ:SDGR) is one of the best healthcare AI stocks to buy now. On December 15, BofA Securities upgraded Schrödinger, Inc. (NASDAQ:SDGR) from Neutral to Buy, with a $24 price target. BofA stated this move is a result of its growing optimism that Schrödinger’s recent pivot away from resource-heavy internal drug development toward its core software business is clearing the path for stronger, more predictable growth.

BofA Upgrades Schrödinger (SDGR) to Buy After Strategic Pivot to Software

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BofA described Schrodinger’s strategic refocus on software operations as creating a cleaner story for the company. This is a simpler, more streamlined business model that reduces complexity and cash burn from clinical programs, noted BofA. It added that this shift positions Schrodinger to better capitalize on the ongoing pharmaceutical research and development cycle, where demand for advanced computational tools in early-stage discovery remains robust.

In a different update, on December 3, KeyBanc reiterated an Overweight rating on Schrodinger with a $28 price target. This action followed direct meetings with the company’s CEO and CFO. KeyBanc highlighted a compelling turnaround as Schrodinger redirects resources toward its high-margin software core. Management discussions on a non-deal roadshow emphasized product expansions into new budgets and longer-term growth potential from current programs.

KeyBanc views the stock as cheaply valued at roughly three times 2026 consensus revenue estimates. And that it presents an attractive opportunity for healthcare technology investors.

Schrödinger, Inc. (NASDAQ:SDGR) develops computational platforms for drug discovery. It combines physics-based molecular modeling with AI to accelerate pharmaceutical research.

While we acknowledge the potential of Schrödinger, Inc. (NASDAQ:SDGR) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than SDGR and that has 100x upside potential, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.