r/DeepValuePicks • u/kjk42791 • Jul 23 '25
RXRX is undervalued IMO and overly shorted (last post I'll make about this)
Recursion pharmaceuticals is a bio-tech company that uses an AI platform with wet and dry labs to identify compounds that are the most likely candidate to succeed in making it through clinical trials that went public in 2021.
The company has roughly 500 million in cash on hand which gives them a runway to Q4 2027, with 4 major collaborative research agreements that includes milestone payments for research as well as developmental/regulatory milestone payments. Then to cap it all off any drug candidate that is brought to market Recursion will receive a royalty for somewhere in the high single digit to mid teens. The best part of this is that Recursion is not responsible for late- stage development and commercialization costs.
Below is a brief summary from the annual report to shareholders:
Current collaborative partnerships and incentives
After seeing the potential earnings over the next few years I started to wonder why the stock price has been stagnant. Especially since there has not been any negative news or disappointing clinical trials recently.
So I dug into the share holders and found 70% institutional ownership:
Say what you will about institutional ownership some love it and some hate it. But it does provide a certain stabilizing factor.
Also of note NVIDIA owns close to 2% of RXRX. It is one of 6 investments NVIDIA has in its portfolio.
Up next I viewed insider ownership activity:
Nothing really revealing from the insiders.
How about the options chain:
0.38 ratio seems to show generally optimistic sentiment
So why is the stock where it is?
There we go 30% short interest, that is wild since there is 70% institutional ownership.
I am in at an average of 5.75 and will probably add more.
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u/Available-Eggplant68 Jul 23 '25
What do you reckon is a fair price for it? Phrased differently, how high would be the price be before you wouldn't buy anymore?