Successfully navigating the stock market requires patience and a long-term perspective. The key is to follow a consistent plan and make regular contributions to a retirement account, allowing the power of compounding to work its magic over time.
However, there is an undeniable attraction in the search for potential multibagger stocks. There’s something captivating about companies with disruptive innovations, whose stocks could be on the cusp of rapid growth and capable of generating life-changing returns for shareholders.
Recursion Pharmaceuticals(NASDAQ:RXRX) It is a biotechnology in the clinical stage that may have that level of potential. The company leverages artificial intelligence (AI) for drug discovery and promises to revolutionize medicine. Let’s explore whether buying stocks could eventually help you become a millionaire.
Recursion has quickly established itself as a leader in the field of AI-based biotechnology. The company’s BioHive-2 supercomputer, powered by NVIDIA AI chips are one of the most powerful accelerated computing systems in the world.
via advanced machine learning Using these techniques, BioHive-2 analyzes large amounts of biological data to identify drug targets, including proteins and genes involved in diseases. Recursion’s operating system (OS) screens millions of compounds to identify potential drug candidates, while predicting the properties of drug molecules and optimal patient populations to improve drug design.
These efforts accelerate research into treatments across 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-based approach. This combination has created a vertically integrated platform, resulting in a fundamentally stronger company.
Image source: Getty Images.
The good news is that Recursion’s technology has already delivered promising results, with a strong pipeline of drug candidates now incorporating Exscientia’s legacy programs.
One of the most promising prospects is REC-994, which could become the first oral therapy to treat symptomatic cerebral cavernous malformation (CCM), a brain hemorrhage condition that currently lacks approved treatments.
REC-617 has also shown encouraging results, with a recent interim Phase 1 study demonstrating positive patient responses and good tolerability in the treatment of advanced solid tumors. The company believes this drug has the potential to be “best in class,” one of several reasons that make Recursion an intriguing opportunity for investors.
Looking ahead to 2025, the market will closely monitor clinical readouts and regulatory updates as catalysts for Recursion stock:
Source: Recursion Pharmaceuticals.
It seems likely that at least one of Recursion Pharmaceuticals’ candidates could eventually gain approval as a novel therapy, transforming the company into a commercially sustainable operation for the next decade.
But making a much more optimistic case for the stock, as an investment that will be multiplied many times over, would be a much more challenging proposition. It would likely require Recursion to develop a blockbuster drug capable of generating billions of dollars in sales over several years.
The reality is that Recursion is still years away from bringing a drug to market. The company currently generates only limited revenue through partnership milestone payments and research grants, while facing substantially higher operating expenses. Wall Street analysts project continued financial losses for the foreseeable future, with negative earnings per share (EPS) expected to worsen from a projected loss of $1.54 this year to $1.65 in 2025.
Metric
2023
2024 (estimate)
2025 (estimate)
Revenue (in millions)
$44.6
$70.0
$76.0
Revenue change (year-on-year)
12%
57%
9%
Earnings per share (EPS)
($1.58)
($1.54)
($1.65)
EPS Change (YoY)
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 may keep the stock under pressure. Recursion stock is down about 55% from its 52-week high, and any type of regulatory setback could send the stock even lower.
Another consideration is the highly competitive industry landscape. Major biotechnology and pharmaceutical companies such as merck, AstraZenecaand Pfizeramong others, they increasingly use artificial intelligence in their research and development processes. This widespread adoption raises questions about whether recursion can maintain a technological advantage in the field.
Although Recursion Pharmaceuticals offers compelling upside, I believe that without better visibility into its product approval process, it is too early to buy this stock with conviction. Meanwhile, 2025 will be a crucial year for the company to offer more clarity on its long-term potential. You might want to keep this one on your radar.
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and victor has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Merck and Pfizer. The Motley Fool recommends AstraZeneca Plc. The Motley Fool has a disclosure policy.
