On Tuesday, Twist Bioscience Corporation (NASDAQ:TWST) received an updated price target from Scotiabank (TSX:BNS), with the firm raising it to $54 from the previous target of $50. The analyst at Scotiabank maintained a Sector Outperform rating on the stock. The firm's decision follows Twist Bioscience's strong performance at the end of the fiscal year 2024, surpassing consensus and guidance in all aspects.
Twist Bioscience concluded FY24 on a solid footing, with approximately $276 million in cash reserves, not including a $15 million upfront payment received in October from Xoma (NASDAQ:XOMA) as part of a royalty purchase agreement. The company's initial guidance for FY25 anticipates revenue growth between 17% to 20% year-over-year.
This growth is expected to be driven by Next (LON:NXT) Generation Sequencing (NGS) and Synthetic Biology (SynBio) sectors. Additionally, the company aims for a gross margin of around 50% by the fourth quarter of FY25 and forecasts an improvement in adjusted EBITDA by roughly $30 million year-over-year.
Looking forward, Scotiabank believes that Twist Bioscience is poised to continue outperforming its peers under various macroeconomic scenarios. This optimism is based on the company's early-stage penetration into the NGS and SynBio markets, as well as its limited exposure to capital equipment spending, sales in China (approximately 2% of sales), the National Institutes of Health (NIH) budget (less than 1% of sales), and overseas manufacturing (with 100% manufacturing based in the U.S.).
The analyst highlighted Twist Bioscience's notable gross margin expansions throughout FY24 and estimated that the company is more than sufficiently capitalized to reach profitability with its existing cash reserves. This financial stability is further supported by the non-dilutive Xoma deal for the Biopharma sector and the company's highly disciplined approach to research and development investments, such as data storage.
In conclusion, Scotiabank has raised its FY25 revenue estimate for Twist Bioscience and reiterated its Sector Outperform rating, reflecting confidence in the company's continued success and strategic financial positioning.
In other recent news, Twist Bioscience Corporation reported a robust fiscal fourth quarter with revenues witnessing a 27% increase to $84.7 million compared to the same period last year. The company's total revenue for the fiscal year increased by 28% to reach $330 million. Additionally, the company exceeded its gross margin guidance for the quarter, achieving 45.1%, and saw an annual gross margin improvement to 42.6%.
Baird maintained an Outperform rating on Twist Bioscience and increased the price target to $48.00 from the previous $46.00, following a strong fiscal fourth quarter report. The firm's positive outlook is bolstered by the momentum in synthetic biology and next-generation sequencing.
Looking ahead, Twist Bioscience forecasts fiscal 2025 revenue to be between $367 million and $377 million, with SynBio revenue expected to grow 15% to 18%, and NGS revenue projected to increase 20% to 24%. The company also received an additional $15 million from XOMA, further bolstering its financial position.
InvestingPro Insights
Twist Bioscience's recent performance and Scotiabank's optimistic outlook are further supported by real-time data from InvestingPro. The company's revenue growth remains strong, with a 25.37% increase over the last twelve months as of Q3 2024, and an even more impressive 27.81% quarterly growth in Q3 2024. This aligns with Scotiabank's expectations for continued growth in the NGS and SynBio sectors.
InvestingPro Tips highlight that Twist Bioscience "holds more cash than debt on its balance sheet" and "liquid assets exceed short term obligations," reinforcing Scotiabank's assessment of the company's strong financial position. This financial stability is crucial as Twist Bioscience aims for profitability and margin expansion.
Despite the positive outlook, investors should note that the stock "has taken a big hit over the last week" with a -8.46% return, and "stock price movements are quite volatile." This volatility is reflected in the impressive 72.55% one-year price total return, contrasting with shorter-term declines.
For a more comprehensive analysis, InvestingPro offers 5 additional tips for Twist Bioscience, providing deeper insights into the company's financial health and market position.
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