RXRX Stock Risk & Deep Value Analysis
Recursion Pharmaceuticals Inc
Healthcare • Biotechnology
DVR Score
out of 10
What You Need to Know About RXRX Stock
We analyzed Recursion Pharmaceuticals Inc using our deep value framework. Sign in to see our full verdict and DVR Score.
We ran RXRX through our deep value framework — analyzing financial health, distress signals, competitive moat, and risk factors. Our risk assessment: Aggressive. Here's what we found.
RXRX Risk Analysis & Red Flags
What Could Go Wrong
Recursion's significant cash burn rate, projected to be under $390 million for 2026, could rapidly deplete its $665.2 million cash reserves, especially if the severe ~56% YoY decline in collaboration revenue from Q1 2026 continues, forcing highly dilutive financing before its pipeline can reach critical milestones in the next 18-24 months.
Risk Matrix
Overall
Aggressive
Financial
High
Market
Medium
Competitive
Medium
Execution
High
Regulatory
Medium
Red Flags
- ⚠
Q1 2026 revenue declined 55.8% YoY to $6.5 million, signaling significant near-term top-line headwinds.
- ⚠
Annual cash operating burn projected under $390 million for 2026, representing over 50% of current cash reserves, raises liquidity concerns.
- ⚠
Persistent high net losses, at $117.5 million in Q1 2026, indicate a long path to profitability without sufficient offsetting revenue growth.
- ⚠
Valuation heavily reliant on future, unproven clinical success and collaborations, with high potential for failure in drug development.
Upcoming Risk Events
- 📅
Q2 2026 Earnings Miss (Estimated early-August 2026): A continued significant decline in collaboration revenue or increased cash burn beyond projected guidance could trigger a sell-off.
- 📅
Clinical Trial Discontinuation or Negative Readout (H2 2026 / 2027): Failure or significant delay in key pipeline assets (e.g., REC-1245, REC-4881) could undermine investor confidence and valuation.
When to Reconsider
- 🚪
Exit if cash and equivalents drop below $300 million without securing significant non-dilutive funding by mid-2027.
- 🚪
Sell if two out of three primary pipeline assets (REC-1245, REC-4881, REC-4539) fail or are deprioritized in clinical development.
- 🚪
Exit if quarterly collaboration revenue shows another sequential decline in Q2 2026 or Q3 2026 from the $6.5 million reported in Q1 2026.
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What Does Recursion Pharmaceuticals Inc (RXRX) Do?
Market Cap
$1.83B
Sector
Healthcare
Industry
Biotechnology
Employees
800
Recursion Pharmaceuticals, Inc. operates as a clinical-stage biotechnology company, engages in the decoding biology and chemistry by integrating technological innovations across biology, chemistry, automation, data science, and engineering to industrialize drug discovery in the United States. The company develops REC-994, which is in Phase 2 clinical trial to treat cerebral cavernous malformation; REC-2282, which is in Phase 2/3 clinical trial for the treatment of neurofibromatosis type 2; REC-4881, which is in Phase 1b/2 clinical trial to treat familial adenomatous polyposis; REC-3964, which is in Phase 1 clinical trial to treat Clostridioides difficile infection; and REC-4881, which is in Phase 2 clinical trial to treat AXIN1 or APC mutant cancers. Its preclinical stage product includes RBM39 to treat HR-proficient ovarian cancer. The company has collaboration and agreement with Bayer AG; the University of Utah Research Foundation; Ohio State Innovation Foundation; Roche & Genentech; and Takeda Pharmaceutical Company Limited. Recursion Pharmaceuticals, Inc. was incorporated in 2013 and is headquartered in Salt Lake City, Utah.
Visit Recursion Pharmaceuticals Inc WebsiteInvestment Thesis
If Recursion successfully advances one or more of its key clinical pipeline assets (e.g., REC-4881 into Phase 3 with positive data) or secures a new, significant collaboration generating >$100M in upfront/milestone payments by late 2027, then its AI/ML Biofoundry platform will be further validated, potentially re-rating its valuation to reflect a multi-billion dollar opportunity in industrializing drug discovery. This is bullish because the current $1.83B market cap and $3.44 stock price do not fully price in the transformative potential of AI in biotech and successful clinical outcomes, creating significant upside if execution improves.
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RXRX Price Targets & Strategy
12-Month Target
$9.00
Bull Case
$15.00
Bear Case
$2.00
Valuation Basis
Based on median analyst target and a projected 10x EV/Sales on anticipated 2028 collaboration and milestone revenues, assuming successful advancement of key pipeline assets.
Entry Strategy
Dollar-cost average on dips towards $3.00 (recent support/tax-withholding price), accumulating below $3.50. Monitor for stabilization in collaboration revenue.
Exit Strategy
Take partial profits at $9.00 (median analyst target). Re-evaluate at $15.00+ based on significant clinical trial success or new major partnerships. Set a stop-loss at $2.50 if cash burn accelerates or pipeline failures emerge.
Portfolio Allocation
10% for aggressive risk tolerance, reflecting high risk/reward profile.
Price Targets & Strategy
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Is RXRX Financially Healthy?
Valuation
P/E Ratio
-2.31
Price/Book
2.20
Price/Sales
43.24
Profitability
Gross Margin
7.22%
Operating Margin
-881.32%
Net Margin
-842.93%
Return on Equity
-54.32%
Revenue Growth
11.07%
EPS
$-1.20
Balance Sheet
Current Ratio
5.50
Quick Ratio
5.42
Debt/Equity
0.02
Cash & Equivalents
$665.20M
Cash Flow
Operating Cash Flow
-$81.10M
Free Cash Flow
-$387.80M
Other
Beta (Volatility)
1.02
Does RXRX Have a Competitive Moat?
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🛡️ Narrow
Moat Trend
Expanding
Moat Sources
3 Identified
Recursion's integrated Biofoundry, combining automated wet-lab experimentation with continuously learning AI, creates a powerful data flywheel. The proprietary nature of its biological datasets and AI models makes replication by competitors increasingly difficult, strengthening its competitive advantage over time if it continues to generate valuable insights and pipeline candidates.
Moat Erosion Risks
- •Rapid advancements by competing AI drug discovery platforms or traditional pharma R&D that could diminish Recursion's technological edge.
- •Failure to translate AI-generated insights into successful clinical candidates, leading to a perception that its technology cannot deliver tangible value beyond initial discovery.
RXRX Competitive Moat Analysis
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RXRX Market Intelligence
Sentiment & Insider Activity
Social Sentiment
Neutral/Bullish, driven by excitement for AI in biotech but tempered by financial realities.
Institutional Sentiment
Positive, indicated by analyst median target of $9.00 significantly above current price and 1 buy/overweight rating among sampled analysts.
Insider Activity (Form 4)
Christopher Gibson, Director, had 22,821 shares withheld at $3.04/share to satisfy RSU tax obligations (neutral event). No open-market buys/sells reported.
Options Flow
Normal options activity; no unusual put/call ratio or large institutional block trades identified in the provided data.
Earnings Intelligence
Next Earnings
Estimated early-August 2026 for Q2 2026 results.
Surprise Probability
Medium, given the significant Q1 revenue miss previously reported, but also prior instances of EPS consensus beats.
Historical Earnings Pattern
Mixed reactions, highly sensitive to revenue performance, cash burn, and updates on pipeline progression or new collaborations.
Key Metrics to Watch
Competitive Position
Top Competitor
Schrödinger (SDGR) or Exscientia (EXAI) due to similar AI-driven drug discovery focus and public market presence.
Market Share Trend
Gaining mind share and platform adoption through partnerships (e.g., Roche/Genentech), but not yet generating significant commercial market share in drug sales.
Valuation vs Peers
Likely trading at a premium EV/Sales multiple compared to traditional biotech R&D firms, reflecting its unique AI platform; however, current revenue decline could challenge this premium. Direct comparison on profitability metrics is not viable as most are pre-profitability.
Competitive Advantages
- •Proprietary AI/ML-driven Biofoundry platform with vast biological and chemical datasets.
- •Strategic partnerships with major pharmaceutical companies (e.g., Roche/Genentech).
- •Diversified internal pipeline of AI-discovered assets with multiple shots on goal.
Market Intelligence
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What Could Drive RXRX Stock Higher?
Near-Term (0-6 months)
- •Q2 2026 Earnings Report (Estimated early-August 2026): Key focus on stabilization or rebound in collaboration revenue from Q1's $6.5M and updated 2026 cash burn guidance.
- •Clinical Pipeline Update (H2 2026): Anticipated progress updates or data readouts for lead oncology candidate REC-1245 or NF2 candidate REC-4881, which could de-risk the pipeline.
Medium-Term (6-18 months)
- •New Strategic Collaboration (2027): Announcement of a new significant partnership with a major pharmaceutical company, providing non-dilutive funding and validating the Biofoundry platform, potentially with >$100M in upfront payments.
- •Phase 2 Clinical Data for REC-4881/REC-1245 (Late 2027): Positive data readouts from mid-stage clinical trials would significantly de-risk the assets, attracting further investment or partnership interest.
Long-Term (18+ months)
- •Commercialization of First AI-Discovered Drug (2029-2030): Successful regulatory approval and launch of a Recursion-originated drug, validating the industrialization of drug discovery and unlocking substantial recurring revenue potential.
- •Expansion of Biofoundry into New Therapeutic Areas (Beyond 2028): Demonstrating the platform's versatility beyond current focus areas into new, large disease markets, signifying massive Total Addressable Market (TAM) expansion and diversified revenue streams.
Catalysts & Growth Drivers
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What's the Bull Case for RXRX?
- ✓
Quarterly collaboration revenue stabilization or increase above $10 million/quarter in Q2 2026 and Q3 2026, signaling improved commercial execution.
- ✓
Successful progression of REC-4881 or REC-1245 into Phase 3 clinical trials with positive efficacy and safety data readouts.
- ✓
Reduction in quarterly net loss or operational cash burn below $90 million per quarter, extending cash runway without dilution.
Bull Case Analysis
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Competing with RXRX
See how Recursion Pharmaceuticals Inc compares to related companies
| Company | Market Cap | DVR Score | P/E | Revenue | Profit Margin | Rev Growth | |
|---|---|---|---|---|---|---|---|
Recursion Pharmaceuticals Inc RXRX | $1.8B | 6.3 | -2.3 | $6.5M | -842.9% | 11.1% | |
AbbVie Inc ABBV | $381.1B | 0.1 | 104.8 | $15.0B | 5.8% | 9.5% | Compare → |
Johnson & Johnson JNJ | $557.1B | 1.0 | 26.5 | — | 21.8% | 7.9% | Compare → |
Eli Lilly and Co LLY | $965.0B | 0.5 | 52.6 | — | — | — | Compare → |
Pfizer Inc PFE | $146.4B | 4.0 | 19.5 | $62.6B | 11.8% | 1.4% | Compare → |
UnitedHealth Group Inc UNH | $365.5B | 0.3 | 30.3 | $447.6B | 2.7% | 9.7% | Compare → |
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How Recursion Pharmaceuticals Inc Makes Money
Recursion Pharmaceuticals is a biotechnology company that aims to revolutionize drug discovery and development using a unique 'Biofoundry' approach. This platform integrates artificial intelligence, machine learning, robotics, and high-throughput biological experimentation to generate and analyze massive datasets. By systematically mapping human biology, Recursion identifies potential drug candidates more efficiently than traditional methods. The company generates revenue through strategic collaborations with large pharmaceutical partners, receiving upfront payments, research funding, milestone payments based on drug development progress, and potential royalties from future drug sales. They also develop an internal pipeline of AI-discovered drugs for various diseases.
Read Full Business Model BreakdownFAQ
What is the DVR Score for Recursion Pharmaceuticals Inc (RXRX)?
As of May 29, 2026, Recursion Pharmaceuticals Inc has a DVR Score of 6.3 out of 10, placing it in the "Solid Pick" category. This score is generated by our AI-powered deep value analysis framework that evaluates growth potential, financial health, competitive moat, and risk factors.
What is the market capitalization of Recursion Pharmaceuticals Inc?
Recursion Pharmaceuticals Inc's market capitalization is approximately $1.8B. The company operates in the Healthcare sector within the Biotechnology industry.
What ticker symbol does Recursion Pharmaceuticals Inc use?
RXRX is the ticker symbol for Recursion Pharmaceuticals Inc. The company trades on the NMS.
What is the risk level for RXRX stock?
Our analysis rates Recursion Pharmaceuticals Inc's overall risk as Aggressive. This assessment considers execution risk, market risk, financial risk, competitive risk, and regulatory risk. For a full breakdown, see the risk analysis section above.
What is the P/E ratio of RXRX?
Recursion Pharmaceuticals Inc currently has a price-to-earnings (P/E) ratio of -2.3. This is below the market average, which could indicate the stock is undervalued or facing headwinds.
Is Recursion Pharmaceuticals Inc's revenue growing?
Recursion Pharmaceuticals Inc has reported revenue growth of 11.1%. The company is showing strong top-line momentum.
Is RXRX stock profitable?
Recursion Pharmaceuticals Inc has a profit margin of -842.9%. The company is currently unprofitable.
How often is the RXRX DVR analysis updated?
Our AI-powered analysis of Recursion Pharmaceuticals Inc is refreshed regularly to incorporate the latest financial data, market conditions, and news. The most recent update was on May 29, 2026.
Important Disclaimer – Not Financial Advice
Deep Value Reports is an independent research platform for educational and informational purposes only. We are not financial advisors, investment advisors, or licensed professionals. The analysis, scores, and information provided on this page for RXRX (Recursion Pharmaceuticals Inc) should not be construed as personalized investment advice, a recommendation to buy or sell any security, or an offer to provide investment advisory services.
All investments involve risk, including the potential loss of principal. Past performance does not guarantee future results. Always conduct your own research, consider your financial situation, and consult with a qualified financial advisor before making any investment decisions.