![]() While the valuation is high, it can be a bit more forgiving if one is a long-term investor. There are a couple of points to consider when looking at a company such as Twist as a potential investment. At its current share price of $130 per share, the stock is well off of highs but still commanding a hefty premium EV to Sales multiple of 47X on a forward basis. The company's revenues have not grown that quickly, so the result of the price action has been multiple expansion. Shares of Twist have risen dramatically over the past year, up a staggering 474%. Given the company's exciting technology in an innovative space, the stock has generated excitement. Given the company's cash burn, I would expect another equity raise at some point in the next few years. The company has generated new funds with equity raises, its most recent offering coming in December of 2020. Financially, Twist is in its infancy as a company. Investors will want to see continued margin expansion, but should not expect profitability to occur for a while yet. Margins have expanded over time, and have been positive over the past two years. Twist is also nowhere near profitability, with a cash burn that exceeds its entire revenue base. The company is investing in a facility to double capacity, so given the expanding use cases for the technology, I expect growth to remain quite strong for the upcoming five year period (would revisit in the future to determine longer-term period). Analysts are currently estimating $120 million for FY21 (33% YoY growth), and $166 million in FY22 (38% YoY growth). Twist has exhibited torrid revenue growth, and that is projected to continue. That being one with a rapidly expanding revenue base, that is operating at a loss because every dollar the company brings in is pumped back into the company to continue expansion efforts. Looking At The FinancialsĪs a young company founded in 2013 (and went public in 2018), it's reasonable to expect the financial profile of a typical growth company. The semiconductor was transformative for electronics, and I think that a similar leap can be realized in biotechnology. Think of Twist inventing the "semiconductor" of DNA synthesis. ![]() It is almost a certainty that as technology advances within DNA synthesis, that more applications and uses will emerge - increasing the total addressable market for companies such as Twist Bioscience.ĭNA synthesis is a busy field (as is much of the biotech sector), but Twist brings a unique "twist" with their technology that utilizes software and silicon to bring much larger and more efficient scale to DNA synthesis than traditional methods. DNA synthesis is driving innovation in many industries such as chemicals, food and agriculture, healthcare, energy and biofuels, and more. DNA synthesis is not a ground-breaking concept, but the technology and science behind the concept has matured a bit in recent years. Twist is a company that uses proprietary technology to commercially produce synthetic DNA. While there are risks to an investor in Twist, the long-term potential is notable despite a steep valuation. ![]() Biotechnology company Twist Bioscience ( NASDAQ: TWST ) is in early stages of combining technology and biology in a manner that offers the potential to completely reinvent entire industries. Along with that, is continued progress towards major breakthroughs in how we manipulate nature's most complex creation - genomics. We are steadily seeing sweeping advancements in healthcare, and how we treat disease. Today, innovation moves at a pace that is potentially faster than any point in history. “I think the biggest innovations of the 21st century will be the intersection of biology and technology. Photo by Tetiana Lazunova/iStock via Getty Images
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