Recursion Pharmaceuticals
RXRX
$3.59
+1.13%
Recursion Pharmaceuticals is a clinical-stage biotechnology company that operates an AI-native drug discovery platform, integrating biology, chemistry, automation, and data science to industrialize the drug development process; its revenue derives primarily from license and service agreements (approximately $18.1M of the most recent quarter's $18.6M) rather than product sales, with a small grant component. Recursion positions itself as a platform company rather than a traditional single-asset biotech, differentiating itself through its proprietary phenomics and machine-learning infrastructure and its stated ambition to become a 'TechBio' leader, though it remains pre-commercial with no approved products. The current investor narrative is dominated by the debate over whether AI-driven drug discovery can translate into durable economic value: recent coverage frames Recursion as the speculative foil to better-capitalized peers like Moderna, while Cathie Wood's ARK has been cited as a buyer of beaten-down growth names including RXRX. With the stock down sharply over the trailing year despite a recent rebound, sentiment hinges on pipeline readouts, partnership economics, and the company's ability to narrow its cash burn before diluting shareholders further.…
RXRX
Recursion Pharmaceuticals
$3.59
Related headlines
Investment Opinion: Should I buy RXRX Today?
Rating: Hold (speculative, position-sized). The core thesis is that Recursion's $561.53M cash pile, 0.069 debt-to-equity, and 5.50 current ratio give it roughly 5-7 quarters of runway to prove that AI-native drug discovery can convert into durable partnership and milestone revenue, but at 24.5x trailing sales against 2.58% year-over-year revenue growth, the current price already discounts a successful platform narrative that has not yet been demonstrated. With only one contributing analyst (average EPS estimate -$0.94, revenue estimate $247.5M) and no published consensus target, the institutional split — JP Morgan Overweight and Needham Buy versus Morgan Stanley Equal Weight and BofA Neutral — is the most reliable anchor, and it leans cautiously constructive rather than outright bullish.
Supporting evidence is mixed but tilts toward patience over accumulation at $3.68. On the positive side, Q3 2026 gross margin swung to 45.85% ($8.51M gross profit) from -93.0% in Q1 2026 and -471.8% in Q3 2025, the PS multiple has compressed from 421.5x in Q3 2025 and over 1,160x in Q4 2021 to 24.5x today, price-to-book of 1.62x sits below the historical 2.1x-5.5x band, and the stock is up 16.09% over three months and 12.54% over six months, outperforming SPY by 18.10 and 9.43 points respectively. Against that, revenue of $18.55M grew only 2.58% YoY and is barely above the $19.10M booked in Q2 2025, Q3 2026 net loss was -$119.04M (roughly -642% net margin) on R&D of $99.12M and G&A of $32.56M, trailing free cash flow is -$314.48M, and shares outstanding have risen from 402.8M in Q1 2025 to 543.0M in Q3 2026 — roughly 35% dilution with more likely before the cash runs out.
The biggest risks that could invalidate even a Hold are a delayed or repriced partnership milestone (revenue swung from $35.54M in Q4 2025 to $6.47M in Q1 2026), a discounted equity raise into a stock already down 32.35% over the trailing year, and a pipeline readout failure that removes the option value underpinning the multiple. This Hold would upgrade to Buy on evidence of license revenue reaccelerating toward the $247.5M analyst average or a sustained gross margin above 45% alongside narrowing cash burn, and would downgrade to Sell on a break below the $2.85 180-day low, a financing announced below $3.00, or trailing revenue growth turning negative. Valuation verdict: cheap relative to its own history (24.5x PS versus 421.5x a year ago, 1.62x P/B versus a 2.1x-5.5x band) but expensive in absolute terms versus the 3-6x sales typical of large-cap biotech — fairly valued only if you accept that the premium is payment for pipeline optionality, not current fundamentals.
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RXRX 12-Month Price Forecast
The forward view is genuinely balanced: the balance sheet removes near-term solvency risk and the PS multiple has already compressed from 421.5x in Q3 2025 to 24.5x, but 2.58% revenue growth and -$119.04M quarterly net losses mean the current price is still paying for a platform story rather than a business. Momentum has improved (up 16.09% over three months, 12.54% over six months, outperforming SPY by 18.10 and 9.43 points) yet the stock has faded 10.68% over the past month and dropped 3.92% on 20.8M shares, suggesting the October spike to $4.78 was overextended. With no consensus price target and a 4.5x spread between high and low revenue estimates, single news events — a partnership, a readout, or a financing — will dominate the next twelve months far more than any gradual fundamental trend. I would upgrade to bullish on a durable license-revenue step-up toward the $247.5M analyst average or a validated pipeline readout, and downgrade to bearish on a break below $2.85, a sub-$3.00 equity raise, or trailing revenue growth turning negative.
Wall Street consensus
Analyst coverage is extremely thin: only 1 analyst provides estimates in the dataset, with an average estimated EPS of -$0.94 (range of -$2.16 to -$0.26) and average estimated revenue of $247.5M (range of $110.3M to $494.4M). No consensus price target or Buy/Hold/Sell distribution is available, so implied upside cannot be calculated. The institutional ratings history is more informative: Needham has maintained a Buy rating (most recently October 19, 2026), JP Morgan upgraded to Overweight in December 2025 and reiterated it in April 2026, while Morgan Stanley and BofA remain Equal Weight and Neutral respectively — a split that leans cautiously constructive but reflects meaningful disagreement.
With only one contributing analyst and no published target range, the signal strength is weak and the dispersion in revenue estimates is enormous — the high estimate of $494.4M is roughly 4.5x the low estimate of $110.3M, implying very high uncertainty about partnership and milestone timing. The bullish case (Needham, JP Morgan) rests on pipeline catalysts and platform validation, while the neutral camp (Morgan Stanley, BofA) appears to weight cash burn, dilution risk, and the lack of revenue acceleration more heavily. Limited coverage is typical of a small/mid-cap, pre-commercial biotech with a $1.83B market cap and 600 employees; it implies less efficient price discovery, higher volatility, and greater sensitivity to single news events, and investors should treat any single analyst view with corresponding caution.
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Bulls vs Bears: RXRX Investment Factors
The bear case currently carries stronger evidence: revenue growth of 2.58% cannot support a 24.5x sales multiple, losses of -$119M per quarter are enormous relative to an $18.55M top line, and share count has grown roughly 35% since Q1 2025 with more dilution likely given a -$314.48M trailing free cash flow. The bull case rests almost entirely on balance-sheet optionality ($561.53M cash, 0.069 debt-to-equity), a gross-margin improvement to 45.85%, and a split-but-constructive institutional rating backdrop (JP Morgan Overweight, Needham Buy). The single most important tension is whether AI-platform partnership and pipeline milestones can convert into durable, scaling revenue before the cash pile forces another equity raise; a reacceleration in license revenue would validate the multiple, while another flat quarter would likely trigger further de-rating and dilution. Until that resolution, the stock is a binary, news-driven speculation rather than a fundamentals-supported investment.
Bullish
- Cash runway with minimal leverage: Recursion ended Q3 2026 with $561.53M in cash, a current ratio of 5.50, and debt-to-equity of just 0.069, so there is no near-term solvency risk. At the Q3 2026 free cash flow burn of -$77.81M per quarter, the balance sheet funds roughly 7 quarters of operations before a raise is needed.
- Gross margin swing to positive: Q3 2026 gross margin reached 45.85% ($8.51M gross profit) versus -93.0% in Q1 2026 and -49.8% in Q2 2026. While partly timing-driven, the move from deeply negative to solidly positive cost-of-revenue economics is a genuine improvement versus the -471.8% gross margin in Q3 2025.
- Institutional ratings lean constructive: JP Morgan upgraded to Overweight in December 2025 and reiterated in April 2026, and Needham has maintained a Buy as recently as October 19, 2026. That two-house bullish camp against Morgan Stanley and BofA at Equal Weight/Neutral is a cautiously positive split for a name with only one contributing estimate.
- Valuation de-rated to historical low end: The PS ratio has compressed from 1,160x in Q4 2021 and 421.5x in Q3 2025 to 24.5x today, and price-to-book of 1.62x sits below the historical 2.1x-5.5x band. Much of the speculative froth has already been removed, which limits further multiple compression from here.
Bearish
- Revenue effectively stagnant at $18.55M: Q3 2026 revenue of $18.55M grew just 2.58% year-over-year and is actually below the $19.10M booked in Q2 2025. The quarterly series ($6.47M, $7.67M, $18.55M in 2026) reflects milestone timing, not a scaling commercial curve, and $18.06M of the quarter came from license/service with only $0.50M in grants.
- 24.5x sales for 2.6% growth: The stock trades at 24.5x trailing sales while growing revenue at 2.58%, versus typical large-cap biotech at 3-6x sales. That multiple can only be justified by pipeline option value, not current fundamentals, and it is not backed by the double-digit growth premium peers typically require.
- Massive losses dwarf the revenue base: Q3 2026 net loss was -$119.04M on $18.55M of revenue (net margin roughly -642%), with operating income of -$123.18M and EBITDA of -$102.48M. R&D of $99.12M and G&A of $32.56M alone are more than seven times quarterly revenue, so profitability is not remotely imminent.
- Persistent dilution from equity issuance: Free cash flow is -$314.48M on a trailing basis, funded by $85.52M of stock issued in Q3 2026 and $134.17M in Q4 2025. Shares outstanding rose from 402.8M in Q1 2025 to 543.0M in Q3 2026, a roughly 35% increase that erodes per-share value and is likely to repeat before cash runs out.
RXRX Technical Analysis
RXRX is in a longer-term downtrend that has recently transitioned into a volatile recovery attempt. The stock is down -32.35% over the trailing year versus a +10.39% gain for SPY, a relative-strength gap of -42.74 percentage points, and it has posted a maximum drawdown of -58.17% over the observed window. At the current price of $3.68, the stock sits roughly 77% of the way up its 180-day range (low near $2.85, high near $4.78), meaning it has recovered meaningfully off its lows but remains well below its peak — a positioning that reflects improving momentum rather than a confirmed breakout to new highs.
Short-term momentum is diverging from the longer-term trend in a way that warrants attention. The stock is up +16.09% over three months and +12.54% over six months, but has pulled back -10.68% over the past month, underperforming SPY's -1.99% by 8.69 percentage points. That one-month reversal follows a sharp October spike to $4.78 on October 5 and a subsequent fade to $3.68, suggesting the rally became overextended and is now digesting gains; the -3.92% single-day drop on the latest session (from $3.83 to $3.68) on elevated volume of roughly 20.8 million shares signals active distribution rather than quiet consolidation.
Key technical levels are well defined. Support sits in the $2.85-$3.00 zone, the 180-day low area tested repeatedly in May and July, while resistance is anchored at the $4.78 October high, with intermediate resistance near $4.35 (the late-October close). A decisive break above $4.78 would confirm a trend reversal and likely invite momentum buyers, whereas a breakdown below $2.85 would signal a resumption of the primary downtrend and put the -58.17% drawdown low back in play. Beta is not provided in the data, but the stock's -32.35% one-year return against SPY's +10.39% and its 58% peak-to-trough drawdown imply substantially above-market volatility, arguing for smaller position sizing and wider stops.
Beta
—
—
Max Drawdown
-58.2%
Largest decline past year
52-Week Range
—
Price range past year
Annual Return
-23.8%
Cumulative gain past year
| Period | RXRX Return | S&P 500 |
|---|---|---|
| 1m | -10.5% | -2.4% |
| 3m | +8.5% | -2.3% |
| 6m | +22.5% | +2.8% |
| 1y | -23.8% | +11.3% |
| ytd | -14.5% | +11.4% |
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RXRX Fundamental Analysis
Revenue is small, lumpy, and effectively stagnating at the top line. The most recent quarter (Q3 2026) delivered $18.55M in revenue, up just +2.58% year-over-year, and the multi-quarter trend is erratic: $6.47M in Q1 2026, $7.67M in Q2 2026, $35.54M in Q4 2025, and $5.18M in Q3 2025. The sequential jump from Q2 to Q3 reflects milestone and license timing rather than a durable growth curve, and the fact that Q3 2026 revenue of $18.55M is barely above the $19.10M booked in Q2 2025 underscores that the business has not scaled. With license and service revenue of $18.06M and grants of just $0.50M, the investment case rests entirely on future partnership and pipeline value, not current commercial traction.
The company is deeply unprofitable, and the loss profile is large relative to its revenue base. Q3 2026 net income was -$119.04M on $18.55M of revenue, a net margin of roughly -642%, with operating income of -$123.18M and EBITDA of -$102.48M. Gross margin was 45.85% in Q3 2026 ($8.51M gross profit), a sharp improvement from negative gross margins in Q1 2026 (-93.0%) and Q2 2026 (-49.8%), but the swing is driven by cost-of-revenue timing rather than operating leverage; R&D of $99.12M and G&A of $32.56M continue to dwarf revenue. The reported net margin of -863% and gross margin of -62% in the valuation dataset reflect trailing distortions, but the directional read is clear: losses remain enormous and profitability is not imminent.
Balance-sheet strength is the company's key near-term asset. Cash at the end of Q3 2026 was $561.53M, the current ratio is 5.50, and debt-to-equity is a very low 0.069, so there is no solvency risk in the near term. However, free cash flow is deeply negative at -$314.48M on a trailing basis (Q3 2026 alone was -$77.81M), and the company has been funding itself through equity issuance — $85.52M of common stock issued in Q3 2026 and $134.17M in Q4 2025 — which is dilutive; shares outstanding rose from 402.8M in Q1 2025 to 543.0M in Q3 2026. ROE is -57.0%, and at the current burn rate the $561.53M cash balance implies roughly 5-7 quarters of runway before another raise is likely, making dilution a persistent overhang.
Quarterly Revenue
$18552000.0B
2026-09
Revenue YoY Growth
+258.5%
YoY Comparison
Gross Margin
45.9%
Latest Quarter
Free Cash Flow
$-314475000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is RXRX Overvalued?
Because Recursion is loss-making (trailing EPS of -$0.35, trailing net income deeply negative), the PE ratio is not meaningful — the trailing PE of -2.84 and forward PE of 0.19 are artifacts of negative earnings and should be disregarded. The appropriate primary metric is price-to-sales: the stock trades at a PS ratio of 24.5x on trailing revenue, with a price-to-book of 1.62x and an EV/EBITDA of -2.08x (negative, reflecting EBITDA losses). A 24.5x sales multiple for a company growing revenue at just +2.58% year-over-year is an extreme valuation that can only be justified by option value on the pipeline, not by current fundamentals.
Peer comparison is constrained by the absence of a formal industry-average dataset, but context is instructive: large-cap biotech and pharma typically trade at 3-6x sales, and even high-growth TechBio peers rarely sustain 20x+ sales without accelerating revenue. Recursion's 24.5x PS represents a substantial premium to the sector, and unlike premium-valued peers, it is not backed by revenue growth — its +2.58% YoY growth compares unfavorably with the double-digit growth that would normally support such a multiple. The premium therefore reflects the market's speculative pricing of the AI drug-discovery platform and partnership optionality rather than demonstrated commercial execution.
Historically, Recursion's PS ratio has compressed dramatically: it was 120.9x in Q3 2026, 254.8x in Q2 2026, 251.1x in Q1 2026, and 60.6x in Q4 2025, versus 421.5x in Q3 2025 and over 1,160x in Q4 2021. The current 24.5x sits near the low end of its own historical band, which could signal either a value opportunity after a multi-year de-rating or persistent fundamental deterioration; given flat revenue and widening losses, the more defensible interpretation is that the market has progressively repriced the story lower as commercialization has failed to materialize. Price-to-book of 1.62x is also near the low end of its historical range (2.1x-5.5x), reinforcing that the stock is cheap relative to its own history but not necessarily cheap in absolute terms.
PE
-2.8x
Latest Quarter
vs. Historical
N/A
5-Year PE Range 17x~59x
vs. Industry Avg
29.3x
Industry PE ~29.3x*
EV/EBITDA
-2.1x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are dominated by the gap between a -$314.48M trailing free cash flow and an $18.55M quarterly revenue base growing only 2.58% year-over-year. Q3 2026 alone burned -$77.81M, and with $561.53M of cash the company has roughly 5-7 quarters of runway, making another dilutive raise highly probable; shares already rose from 402.8M in Q1 2025 to 543.0M in Q3 2026. Revenue is concentrated in license and service agreements ($18.06M of $18.55M) with lumpy milestone timing, as shown by the swing from $35.54M in Q4 2025 to $6.47M in Q1 2026, so a single delayed partnership payment can materially miss expectations. ROE of -57.0% and a -642% net margin confirm that operating leverage is not yet visible despite the Q3 gross margin improving to 45.85%.
Market and competitive risks center on valuation compression: 24.5x sales for 2.58% growth is far above the 3-6x typical for large-cap biotech, and the multiple has already collapsed from 421.5x in Q3 2025, showing how quickly the market reprices this story. Competitive perception is a live threat, with recent coverage (Motley Fool, July 2026) explicitly favoring Moderna's proven mRNA platform over Recursion's unproven AI approach, and Cathie Wood's ARK buying characterized as speculative rather than conviction-driven. Beta is not provided, but a -32.35% one-year return against SPY's +10.39% and a -58.17% max drawdown imply substantially above-market volatility, and thin coverage (one contributing analyst, revenue estimates ranging $110.3M to $494.4M, a 4.5x spread) means single news events can move the stock violently.
Worst case, a pipeline readout failure or a delayed partnership milestone coincides with a financing, forcing a discounted equity raise into a stock already down 32% over a year. That chain would likely retest the 180-day low of $2.85, roughly -23% from the current $3.68, and a break below it would put the -58.17% drawdown low back in play, implying a decline toward the low-$2 range, or roughly -30% to -40% from here. With no consensus price target and only a single analyst EPS estimate of -$0.94, there is no published bear-case target to anchor downside, which itself raises the risk of an unguided selloff. Position sizing should assume a realistic loss of 30-40% in an adverse scenario, with the $2.85 support level as the key stop reference.
FAQ
The most severe risk is financial: trailing free cash flow of -$314.48M against $561.53M of cash implies roughly 5-7 quarters of runway, and the company has already funded itself with $85.52M of stock issued in Q3 2026 and $134.17M in Q4 2025, lifting shares outstanding from 402.8M in Q1 2025 to 543.0M in Q3 2026 — about 35% dilution with more likely. Second is revenue concentration and lumpiness: $18.06M of the $18.55M quarterly top line came from license and service agreements, and revenue swung from $35.54M in Q4 2025 to $6.47M in Q1 2026, so a single delayed partnership milestone can badly miss expectations. Third is valuation compression: 24.5x sales for 2.58% growth leaves little room for disappointment, and the multiple has already collapsed from 421.5x a year ago, showing how fast the market reprices this story. Fourth is competitive and sentiment risk — recent coverage explicitly favors Moderna's proven mRNA platform over Recursion's unproven AI approach, and the stock's -32.35% one-year return versus SPY's +10.39% (a -42.74 point relative-strength gap) with a -58.17% max drawdown shows how violently sentiment can move it.
The base case (50% probability) targets $3.00-$4.35, assuming revenue stays lumpy in the $7M-$35M quarterly band, at least one dilutive raise occurs, gross margin oscillates around the 24%-46% range, and the stock chops between the $2.85 support zone and $4.35 resistance. The bull case (25%) targets $4.78-$5.50 on a partnership expansion with meaningful upfront license revenue, a positive pipeline readout validating the phenomics platform, or gross margin holding above 45% for two quarters with narrowing burn. The bear case (25%) targets $2.20-$2.85 if a pipeline setback or delayed milestone coincides with a discounted financing, retesting the 180-day low and potentially the drawdown low. The base case is most likely because it requires no new information — just continuation of the current trajectory — and its key assumption is that no single binary event (readout, partnership, or raise) forces a repricing. Note that with only one contributing analyst and revenue estimates spanning $110.3M to $494.4M, forecast confidence is inherently low.
The answer depends on the lens. Relative to its own history, RXRX looks cheap: the PS ratio has compressed from over 1,160x in Q4 2021 and 421.5x in Q3 2025 to 24.5x today, and price-to-book of 1.62x sits below its historical 2.1x-5.5x band. In absolute terms, however, 24.5x trailing sales for a company growing revenue 2.58% is expensive — large-cap biotech typically trades at 3-6x sales, and even premium TechBio peers usually need double-digit growth to sustain 20x+. Traditional earnings metrics are unusable here: trailing PE of -2.84 and EV/EBITDA of -2.08x are artifacts of losses, and the forward PE of 0.19 reflects a single analyst's estimate rather than a reliable consensus. The market is effectively pricing pipeline option value and partnership optionality, not current cash flows, which means the multiple is fragile to any news that undermines the platform narrative. Verdict: fairly valued only if you accept the premium as payment for optionality; expensive on fundamentals alone.
From a pure risk/reward standpoint, RXRX is a balanced-to-unfavorable bet at $3.68: the upside case targets $4.78-$5.50 (roughly +30% to +49%) on a partnership or pipeline catalyst, while the bear case targets $2.20-$2.85 (roughly -23% to -40%) if a readout fails or a discounted raise lands. The balance sheet is the strongest argument for owning it — $561.53M cash, a 5.50 current ratio, and 0.069 debt-to-equity mean no near-term solvency risk — but 24.5x sales against 2.58% revenue growth means you are paying a premium for a story that has not yet shown commercial traction. Analyst coverage is too thin to anchor a view: only one contributing estimate (average revenue $247.5M, average EPS -$0.94) and no published consensus target, with JP Morgan and Needham constructive against Morgan Stanley and BofA neutral. It is a reasonable buy only for risk-tolerant investors who size it as a small speculative position and can tolerate 30-40% drawdowns, not for anyone seeking fundamentals-supported compounding.
RXRX is structurally a long-duration, event-driven speculation rather than a stable long-term compounder or a clean short-term trade. It pays no dividend (payout ratio 0), has no approved products, and its earnings visibility is minimal — one analyst estimate, a 4.5x spread between high and low revenue forecasts, and quarterly revenue that has swung between $5.18M and $35.54M over the past five quarters. Volatility is extreme: a -58.17% max drawdown, a -32.35% one-year return against SPY's +10.39%, and a -3.92% single-day drop on 20.8M shares all argue against tight stop-based trading, where gap risk from a financing or readout can blow through levels. The appropriate approach is a minimum 18-24 month holding period sized small enough to absorb a 30-40% drawdown, giving the company time to convert its $561.53M cash runway into a partnership or pipeline catalyst. Anyone unwilling to hold through a sub-$3.00 print should not own it at $3.68.