NEW YORK – Investment bank Evercore ISI on Tuesday upgraded shares of Twist Bioscience to Outperform, citing management's response to a recent report from a short seller that dragged down its share price toward the end of 2022.
"We believe the tides are changing and have become incrementally positive on this name," analyst Vijay Kumar wrote in a note to investors. He set a price target of $36 for shares of the synthetic DNA maker, approximately 50 percent higher than Friday's closing price. In afternoon trading on the Nasdaq, Twist's stock price was flat at $23.41.
Shares of Twist fell approximately 75 percent over 2022, Kumar noted, capped off by a 20 percent dip in November spurred by a short seller's report raising concerns about the firm's accounting practices and new factory in Oregon, slated to come online this quarter. "While there has been negative sentiment around [Twist] into year's end, we thought management did a good job walking through the bear concerns, which gives us confidence in fiscal year 2023 and beyond," he wrote.
Specifically, the firm addressed two of the three "material weaknesses brought up by [accounting firm] PricewaterhouseCoopers" and hosted a tour of its factory in late November, Kumar said. "Without this overhang, we expect investors to value Twist based on fundamentals."
The new valuation equates to approximately seven times the firm's expected calendar year 2023 revenues and 17 times its anticipated gross profit.
For fiscal year 2023, which began in October, Twist expects total revenues in the range of $261 million to $269 million.