Recursion Pharmaceuticals Before Q4 Earnings: How to Play the Stock

Core Viewpoint - Recursion Pharmaceuticals (RXRX) is set to report its fourth-quarter 2024 results, with expected revenues of $28.73 billion and a loss per share of 36 cents [1]. Financial Performance - The Zacks Consensus Estimate for Recursion's 2024 loss per share has remained constant at$1.57, while the 2025 loss forecast has slightly narrowed from $1.43 to$1.42 [2]. - RXRX has had a mixed earnings performance over the last four quarters, beating estimates in two quarters and missing in the other two, with an average earnings surprise of 1.26% [5][6]. - In the last reported quarter, RXRX experienced a negative surprise of 3.03% [5]. Earnings Expectations - The current Earnings ESP for RXRX is -0.93%, and it holds a Zacks Rank of 3 (Hold), indicating that the odds of an earnings beat are not favorable [7][8]. Pipeline and Collaborations - Recursion does not have marketed products and relies on collaboration and grant revenues, with partnerships with major pharmaceutical companies like Roche, Bayer, Merck, and Sanofi [9]. - The company is developing its lead candidate, REC-994, for treating cerebral cavernous malformation, with plans to meet the FDA for further development [11]. - Other mid-stage candidates include REC-2282 for neurofibromatosis type II and REC-4881 for familial adenomatous polyposis, among others [12]. Research and Development - Research and development expenses are expected to increase due to investments in the proprietary candidate development platform and ongoing clinical activities [13]. Stock Performance - RXRX's stock has increased by 67.9% over the past three months, outperforming the industry and the S&P 500, which saw a decline of 6.5% [14]. - The company's shares trade at a price/book value ratio of 7.84, significantly higher than the industry average of 1.26 [16]. Investment Strategy - Recursion aims to revolutionize drug discovery through AI-powered models, potentially reducing costs and improving efficiency [20][21]. - The company faces competition from traditional biopharma giants and large technology firms investing in drug discovery technologies [22]. - RXRX's first-mover advantage in AI-driven drug discovery positions it as a leader, with a strong pipeline focused on Precision Oncology and Rare Diseases [23].