Successfully navigating the stock market requires patience and a long-term perspective. The key is sticking to a consistent plan and making regular contributions to a retirement account, allowing the power of compounding to work its magic over time.
Nevertheless, there is an undeniable appeal in looking for potential multibagger stocks. There’s something compelling about companies with disruptive innovations, whose shares could be on the cusp of rapid growth and capable of delivering life-changing returns for shareholders.
Recursion pharmaceutical products (NASDAQ: RXRX) is a clinical-stage biotech that may have that potential. The company uses artificial intelligence (AI) for drug discovery and promises to revolutionize medicine. Let’s see if buying the stock can ultimately help you become a millionaire.
Recursion has quickly established itself as a leader in AI-enabled biotechnology. The company’s BioHive-2 supercomputer, powered by Nvidia AI chips are one of the world’s most powerful accelerated computing systems.
Using advanced machine learning techniques, BioHive-2 analyzes massive amounts of biological data to identify drug targets, including proteins and genes involved in diseases. Recursion’s operating system (OS) evaluates millions of compounds to identify potential drug candidates, while also predicting drug molecule properties and optimal patient populations to improve drug design.
These efforts enable accelerated research into treatments for a wide range of conditions while reducing costs compared to traditional methods.
A major development for Recursion this year was its merger with Exscientia, another biotech company focused on AI-based drug discovery. Exscientia’s expertise in advanced chemical design methods complements Recursion’s biology-driven approach. This combination has created a vertically integrated platform, which has resulted in a fundamentally stronger company.
The good news is that Recursion’s technology has already shown promising results, with a robust pipeline of drug candidates now spanning Exscientia’s existing programs.
One of the most promising prospects is REC-994, which could become the first oral therapy for the treatment of symptomatic cerebral cavernous malformation (CCM), a brain bleeding disorder for which there are currently no approved treatments.
REC-617 has also shown encouraging results, with a recent Phase 1 interim study demonstrating positive patient responses and good tolerability in the treatment of advanced solid tumors. The company believes this drug has “best in class” potential, one of the many reasons that make Recursion an intriguing opportunity for investors.
Looking ahead to 2025, the market will closely monitor clinical readouts and regulatory updates as a catalyst for Recursion stock:
It seems likely that at least one of Recursion Pharmaceuticals’ candidates could ultimately gain approval as a new therapy, helping transform the company into a commercially sustainable venture over the next decade.
But making a much more optimistic case for the stock, as an investment that could multiply many times over, would be a significantly more challenging proposition. It would likely take Recursion to develop a blockbuster drug capable of generating billions of dollars in sales over several years.
The reality is that it will take years before Recursion brings a drug to market. Currently, the company generates only limited revenue through partnership milestone payments and research grants, while facing significantly higher operating costs. Wall Street analysts predict continued financial losses for the foreseeable future, with negative earnings per share (EPS) expected to worsen from an expected loss of $1.54 this year to $1.65 in 2025.
|
Metric |
2023 |
2024 (estimate) |
2025 (estimate) |
|
Turnover (in millions) |
$44.6 |
$70.0 |
$76.0 |
|
Change in turnover (YYY) |
12% |
57% |
9% |
|
Earnings per share (EPS) |
($1.58) |
($1.54) |
($1.65) |
|
EPS change (YYY) |
N/A |
N/A |
N/A |
Data source: Yahoo Finance. YOY = year after year.
While the market may overlook a lack of profitability based on longer-term growth prospects, the momentum could keep stocks under pressure. Shares of Recursion are down about 55% from their 52-week high, and any sort of regulatory setback could send the stock even lower.
Another consideration is the highly competitive industrial landscape. Big biotech and pharmaceutical companies love it Merck, AstraZenecaAnd PfizerAmong other things, they are increasingly using artificial intelligence in their research and development processes. This widespread adoption raises questions about whether Recursion can maintain a technological advantage in the field.
While Recursion Pharmaceuticals offers attractive opportunities, I believe that without better insight into the product approval path, it is simply too early to buy this stock with conviction. In the meantime, 2025 will be a pivotal year for the company to provide greater clarity on its long-term potential. You might want to keep this one on your radar.
Before you buy shares in Recursion Pharmaceuticals, consider the following:
The Motley Fool Stock Advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and Recursion Pharmaceuticals wasn’t one of them. The ten stocks that survived the cut could deliver monster returns in the coming years.
Think about when Nvidia made this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $825,513!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates and two new stock picks per month. The Stock Advisor is on duty more than quadrupled the return of the S&P 500 since 2002*.
View the 10 stocks »
*Stock Advisor returns December 16, 2024
Dan Victor has no position in any of the stocks mentioned. The Motley Fool has and recommends positions in Merck and Pfizer. The Motley Fool recommends AstraZeneca Plc. The Motley Fool has a disclosure policy.
Is Recursion Pharmaceuticals Stock a Millionaire Maker? was originally published by The Motley Fool
