NEW YORK – Investment bank SVB Leerink on Tuesday initiated coverage of Twist Bioscience with a Market Perform rating and a price target on the firm's shares of $90.
The San Francisco-based synthetic biology company "is driving significant scale and lowering costs of synthetic DNA fragments (oligos) that form key ingredients of rapidly growing applications and massive end markets from next-generation sequencing, synthetic biology, [and] antibody drug discovery to emerging DNA data storage," analyst Puneet Souda wrote in a research note. He added that the firm's current share price already reflects expectations of growth into those end markets, leading to the Market Perform rating, but he was "inclined to revisit at a more attractive valuation."
The firm's biopharma division is "a fast-developing major growth driver" and accounts for 25 percent of the company valuation but could take years to ramp up and will likely require drug approvals down the line, Souda wrote.
The analyst noted that Twist currently has six DNA "writers" giving it $200 million in revenue output capacity.
In morning trading on the Nasdaq, shares of Twist were up less than 2 percent at $94.43.