This is a watchlist composed of the current stocks we are looking to trade none of these are alerts all alerts will be alerted upon entry just like the others on the weekly investment letter.
Company: PagerDuty, Inc.
Quote: $PD
BT: $15
ST: $24-$30
Sharks Opinion:
PagerDuty is a name we know well, having traded it multiple times in the past. The story hasn’t changed much at the core: this is a small enterprise software business with slow growth and thin cash flow margins. From a fundamental perspective, it looks more like a product suite waiting to be absorbed by a larger consolidator than a standalone long-term growth story.
And that’s exactly why it’s interesting right now.
Market Context & Hedge Fund Positioning
Despite reporting a solid quarter last night, the stock fell clear evidence that the market isn’t buying into PagerDuty’s standalone growth prospects. Instead, the real story seems to be accumulation in anticipation of a sale. Hedge funds have been quietly positioning here, with ARK Invest, Renaissance Technologies, and State Street all showing allocations last quarter. These aren’t random names these are prominent players that tend to get ahead of M&A-driven trades.
Sale Rumors & Corporate Actions
The company itself essentially opened the door to speculation a month ago when management admitted they were exploring strategic alternatives, including a potential sale. On top of that, PagerDuty announced a $200 million share repurchase program during its earnings call a move that often precedes or accompanies M&A discussions as a way to support valuation and shareholder returns.
Why It Makes Sense
Nothing management has done in recent years suggests PagerDuty can scale into a dominant independent vendor. The company’s product suite, while useful, looks far better in the hands of a larger enterprise software player with deeper sales channels. In other words, PagerDuty fits the profile of a tuck-in acquisition, not a standalone compounding machine.
Description: PagerDuty, Inc. engages in the operation of a digital operations management platform in the United States and internationally. The company's digital operations management platform collects data and digital signals from virtually any software-enabled system or device and leverage machine learning to correlate, process, and predict opportunities and incidents.
At its core, PagerDuty exists to keep the digital world running smoothly.
The company’s platform is designed to reduce downtime and outages across mission-critical technology ecosystems an increasingly vital need in a world where even minutes of outage can translate into millions in lost revenue.
Here’s how it works: PagerDuty’s software sits at the very center of a company’s technology stack, monitoring signals from virtually any software- enabled system. When something breaks or even looks like it’s about to break PagerDuty pinpoints the issue and routes it to the right team in real time.
The same capability also applies to opportunities: when digital systems flash signals worth acting on, PagerDuty ensures the right people are mobilized fast.
That reliability is why major names like Zoom, Scribd, Okta, Twilio, Datadog, and more trust PagerDuty to safeguard their digital infrastructure.
Business Model & Revenue Streams
PagerDuty’s revenue model is straightforward but powerful: recurring subscriptions. Customers sign up for plans that scale with the sophistication of their digital operations, from smaller teams to enterprise-level deployments.
This makes PagerDuty both easy to adopt and highly scalable across a wide variety of business sizes. The subscription-based model is sticky by design. Once embedded in a company’s digital workflow, PagerDuty becomes indispensable removing it risks increased outages, lost revenue, and damaged reputations. That stickiness gives PagerDuty a reliable base of recurring revenue, a core strength in the software world.
PagerDuty’s latest quarter paints the picture of a company that’s steady on top-line growth but showing real strength on profitability.
Revenue came in at $123.4 million, up 6.4% year-over-year right in line with Wall Street expectations. While this growth rate is noticeably slower than the company’s historical three-year annualized pace of 14.1%, it still reflects resilience in an enterprise software environment where spending has become more selective.
Non-GAAP EPS was the standout, landing at $0.30 per share a full 49.3% above consensus. That profit beat signals that PagerDuty is driving meaningful operating leverage, even as revenue growth moderates.
Looking ahead:
Q3 revenue guidance was set at about $125 million, essentially flat with analyst projections and implying ~5.1% YoY growth.
For the full fiscal year 2026, management is guiding to $493–497 million in revenue, or 5–6% growth YoY. That’s a modest step down from prior guidance on the high end ($499M), but it keeps expectations realistic in this market backdrop.
On the profit side, guidance is moving the right way: PagerDuty raised its full- year non-GAAP EPS forecast to $1.00–1.04, up from prior expectations of $0.95–1.00. With roughly 94 million diluted shares assumed, the company is showing confidence in margin discipline.
Canaccord Genuity Maintains Buy on PagerDuty, Lowers Price Target to $21
Truist Securities Maintains Buy on PagerDuty, Lowers Price Target to $23
RBC Capital Maintains Outperform on PagerDuty, Lowers Price Target to $20
TD Securities Maintains Hold on PagerDuty, Lowers Price Target to $18
Company: nCino, Inc.
Quote: $NCNO
BT: $27-$30
ST: $42
Sharks Opinion: nCino is a stock just like Pager duty mentioned above, We’ve traded this name multiple times for strong swing returns, but the M&A thesis has always been the real story, and today the setup feels eerily similar to the last time we caught it
Here’s why:
Mission-Critical Banking SaaS – nCino sits at the core of the financial system with its Loan Origination Software (LOS). It automates the entire lending process applications, underwriting, documentation, compliance, and booking delivering both efficiency and compliance at scale. Banks using nCino’s platform consistently run ~5% better efficiency ratios, which translates directly into stronger operating margins. In other words, this isn’t a “nice-to-have” tool it’s essential infrastructure.
Valuation Disconnect – At current levels, nCino trades around 11x CY27 free cash flow, despite having a double-digit organic growth runway.
For context, a business this sticky and mission- critical should be worth at least 25x FY1 FCF, if not closer to 30x, given the durability of its growth trajectory. That’s a massive gap between what the market is pricing and what a strategic acquirer would likely pay.
Fresh Leadership & Activist Influence
The story is also getting more interesting from a governance perspective. A new CEO stepped in as of February 2025, paired with a fresh activist board member. Activists don’t usually come in just to watch. Their presence suggests pressure to unlock value either through operational improvements or, more likely, through a sale process if the stock remains undervalued. Durable Growth, Long-Term Dominance The lending market isn’t going away. If anything, regulation, digitization, and efficiency demands will only intensify. nCino is positioned to be the dominant operating system in commercial lending for decades, with retention rates and customer stickiness that give it a true moat.
Bottom Line: nCino checks every box of a prime M&A target—sticky software, a >10% growth runway, undervalued on FCF, activist pressure, and a new leadership team. For us, this is a buy- and-hold-for-the-headline type trade, where patience could pay off in a big way if consolidation in banking software heats up.
Description: nCino, Inc., a software-as-a-service company, provides software solutions to financial institutions in the United States, the United Kingdom, and internationally. It offers solutions on the nCino Platform, including Onboarding solution that streamlines and enhances the customer onboarding process through a digital platform for credit and non-credit onboarding, commercial account opening, and enterprise-level onboarding; and Account Opening solution, which includes Deposit Account Opening solution for consumers and small businesses.
nCino has quietly established itself as the operating system of choice for global financial institutions, serving more than 1,750 banks and lenders worldwide. Its customer roster includes some of the biggest names in finance Wells Fargo, BNP Paribas, OakNorth, Barclays, and Santander a lineup that underscores just how mission-critical its platform has become.
At its core, nCino is a verticalized CRM, purpose-built for financial services. The company took Salesforce’s developer platform and adapted it to banking workflows, embedding the nuances of lending, account opening, and portfolio management directly into the product. That foundation is what makes it so sticky it doesn’t just digitize processes, it re-engineers them around the realities of banking.
But nCino is more than just a loan origination tool. The platform has expanded into a full suite of modules, including:
Business intelligence & analytics for better decision-making.
Enterprise content management to streamline documentation-heavy processes.
Compliance & risk management tools designed for highly regulated markets. nCino IQ, an AI/ML-driven layer that automates workflows, enhances forecasting, and improves data recognition.
This “built by bankers for bankers” DNA is what separates nCino from generic SaaS. Its roots inside a bank gave it credibility, insider knowledge, and a product-market fit that generic CRMs could never achieve. For financial institutions navigating complex regulation, that insider expertise is not just a nice-to-have it’s the difference between adoption and indifference.
The industry backdrop makes this even more compelling. Like healthcare for Veeva, banking is a highly profitable, regulated vertical where customers are both willing and able to spend on software that helps them stay compliant and efficient. The barriers to entry are high, and once entrenched, vendors like nCino can build relationships that span decades.
nCino’s latest results gave investors exactly what they wanted to see: strong growth, expanding margins, and confidence in the future.
The company reported quarterly revenue of $148.8 million, up 12.4% year- over-year and above analyst expectations. Even more impressive, adjusted EPS came in at $0.22, crushing the consensus estimate of $0.14.
The strength of the quarter prompted management to raise full-year guidance.
nCino now expects:
Revenue between $585 million and $589 million
Adjusted EPS between $0.77 and $0.80
That outlook underscores management’s conviction in the company’s robust growth trajectory, and the market responded with a strong stock rally.
Breaking it down further:
Subscription software revenue grew 15% y/y, showing the company’s shift away from low-margin services is working.
Non-GAAP operating income surged 56%, with margins expanding to 20%, up from 15% a year ago—a clear sign of operating leverage kicking in.
Growth was fueled by new customer wins, deeper penetration with existing clients, and expansion into new geographies, including its first customer in Spain and further traction in the UK and U.S. homebuilding sector.
A key theme for the quarter was AI integration. Management highlighted its strategy of “incremental innovation” deploying AI tools that drive both customer productivity and internal efficiency. During the quarter, nCino rolled out 16 new AI-driven banking adviser features, positioning the platform as a tool for automation at a time when financial institutions are under pressure to streamline operations.
Barclays Maintains Overweight on Ncino, Raises Price Target to $37
Morgan Stanley Maintains Equal-Weight on Ncino, Raises Price Target to $35
B of A Securities Maintains Neutral on Ncino, Raises Price Target to $38
Baird Maintains Outperform on Ncino, Raises Price Target to $40
Company: Schrödinger, Inc
Quote: $SDGR
BT: $19
ST: $34
Sharks Opinion:
Schrödinger (SDGR) is a name we traded earlier this year for a modest gain, but with the stock now trading below our original entry and volumes steadily ticking up, it’s back on our radar. Unlike some of the faster-moving setups we’ve covered, SDGR is more of a long-duration investment a dual play on healthcare innovation and AI-driven SaaS. It won’t be the quickest trade, but we believe the company’s underappreciated fundamentals and deep pipeline make it worth owning for the long term.
The market continues to misprice Schrödinger. Investors have been eager to pay rich premiums for competitors like Tempus AI (TEM) a company with less revenue visibility and a weaker pipeline while Schrödinger, with real revenues and a growing base of partnered programs, is left discounted. To us, this looks like a clear case of misplaced market enthusiasm, and over time, we expect SDGR to steal share as it executes.
At its core, Schrödinger is building something rare: a scalable software platform that accelerates drug discovery. Its molecular simulation software is being used by major pharma companies to shorten the cycle of drug design, reduce costs, and ultimately increase the odds of clinical success.
In parallel, Schrödinger is advancing its own internal pipeline of drug candidates, creating a hybrid model with both recurring software revenue and upside from biotech development.
The key metric to watch here isn’t quarterly EPS— it’s the pace at which Schrödinger is advancing partnerships and pipeline candidates through the discovery process. Every step forward compounds the company’s credibility and creates leverage in both the software and biotech sides of the business.
Description: Schrödinger, Inc., together with its subsidiaries, develops physics-based computational platform that enables discovery of novel molecules for drug development and materials applications. The company operates in two segments, Software and Drug Discovery. The Software segment sells its software to transform molecular discovery for life sciences and materials science industries. The Drug Discovery segment focuses on building a portfolio of preclinical and clinical programs, internally and through collaborations.
The elevator pitch for Schrödinger (SDGR) is straightforward but game- changing: target the $100–$150 billion annual pharma R&D budget and transform the way drug discovery is done. Traditionally, pharmaceutical companies spend years physically generating thousands of molecules in the lab, hoping to find a viable drug candidate. Schrödinger flips that model. Using a blend of physics-based simulations and AI, it can generate billions of virtual molecules, narrow them down to the most promising few dozen, and leave only the highest-probability candidates for laboratory synthesis and testing. The result? Faster, cheaper, and more efficient drug discovery.
But Schrödinger isn’t just waiting around for software licensing to slowly seep into pharma. The company took a bold step: putting its own technology to work. Instead of being only a vendor, Schrödinger is also building a pipeline of drugs and partnerships effectively proving its own model. One notable success is with Morphic, a Schrödinger-partnered biotech that’s being acquired by Eli Lilly next quarter, generating $48 million in revenue for Schrödinger while also embedding a potential royalty stream tied to Eli Lilly’s future drug portfolio.
Crucially, Schrödinger isn’t trying to take these drugs all the way through the costly and risky Phase 3 FDA trials. The strategy is to develop early-stage assets using its software to create higher-probability winners then sell or partner them with big pharma. This not only drives near-term revenue but also embeds Schrödinger’s tech deeper into pharma R&D pipelines, expanding adoption of its software across the industry.
Schrödinger (SDGR) delivered a strong Q2 2025, with results showing continued growth in both software and drug discovery, alongside disciplined expense management:
Total Revenue: $54.8M, up 16% YoY (vs. $47.3M in Q2 2024).
Software Revenue: $40.5M, up 15% YoY, driven by hosted contract growth and contribution revenue, partially offset by prior multi-year on-premise contracts.
Drug Discovery Revenue: $14.2M, up from $11.9M last year, highlighting momentum in the pipeline and partnerships.
Software Gross Margin: 68% (vs. 80% in Q2 2024), pressured by investments in the predictive toxicology initiative.
Operating Expenses: $79.1M, down from $84.1M YoY, reflecting lower R&D costs.
Other Income: $10M, compared to a $1.2M expense in Q2 2024, aided by equity investment revaluations and interest income.
Net Loss: $43.2M, an improvement from $54.0M last year.
Updated 2025 Guidance (as of August 6, 2025):
Software Revenue Growth: +10% to +15%.
Drug Discovery Revenue: $45M to $50M.
Software Gross Margin: 74%–75%.
Operating Expenses: Lower than 2024.
Cash Use in Operations: Significantly reduced vs. 2024.
Q3 2025 Outlook:
Software revenue expected between $36M and $40M.
Takeaway: Schrödinger is delivering healthy top-line growth while demonstrating improved cost discipline. The expansion of drug discovery revenue, alongside a more efficient expense structure and reduced cash burn, reinforces confidence in its hybrid model of SaaS + biotech pipeline. With guidance reaffirmed, investors see a path toward narrowing losses while scaling both software adoption and pharma partnerships.
Morgan Stanley Maintains Equal-Weight on Schrodinger, Lowers Price Target to $19
Citigroup Downgrades Schrodinger to Neutral, Lowers Price Target to $20
Barclays Initiates Coverage On Schrodinger with Overweight Rating, Announces Price Target of $25
Keybanc Maintains Overweight on Schrodinger, Lowers Price Target to $30
