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Evercore ISI Initiates Coverage of Twist Bioscience With Outperform Rating

NEW YORK (GenomeWeb) – Evercore ISI said today that it has initiated coverage of Twist Bioscience with an Outperform rating and a price target of $30.50.

In a note to investors, Evercore ISI Analyst Ross Muken and colleagues wrote that Twist can likely maintain a growth rate of more than 25 percent over the next three to five years through its DNA synthesis and NGS tools businesses.

They expect the DNA synthesis business to become profitable once the company operates at scale in about three years. In addition, Twist's oligonucleotide business is expected to drive the cost of targeted next-generation sequencing further down.

The Evercore ISI analysts also see opportunity for Twist in the pharma industry, where it can provide synthetic RNA and DNA as active pharmaceutical ingredients (APIs) to RNAi therapeutics companies. "We estimate that each new drug, if approved, could deliver an additional $25 million in sales/profits," they wrote.

However, the biggest opportunity lies in DNA data storage, they wrote, an estimated $70 billion market that is growing by high single-digit to low double-digit percentage points. "This opportunity could deliver another $1 billion in value over the long term on a probability-adjusted basis," they wrote.

Among key risks, they mentioned Twist's ongoing litigation with Agilent Technologies over intellectual property.

In April, Twist reported $13.6 million in revenues for the first quarter of 2019, more than double the prior year's first quarter revenues. The company posted a loss of $25.9 million for the quarter and ended with $104.3 million in cash, cash equivalents, and short-term investments. Earlier this month, the company raised $84 million in an upsized public stock offering.

In mid-morning trading on the Nasdaq, Twist Bioscience shares were down about 2 percent at $26.10. 

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