FTSE 100: Index falls as earnings results weigh; pound below $1.33, Bodycote soars
Monday, Twist Bioscience Corporation (NASDAQ:TWST) shares maintained their Market Perform rating with a steady price target of $40.00, as reiterated by analysts at Leerink Partners. According to InvestingPro data, the stock has shown significant volatility with a beta of 2.34, while analyst targets range from $40 to $62. The company met its expectations for the second fiscal quarter of 2025 and upheld its full-year guidance, with management indicating that market share gains from China-based competitors are expected to continue into the second half of 2025. Despite these anticipated gains, Leerink Partners expressed reservations about the long-term sustainability of this growth and the potential for upside, given the current difficulties in the Tools and Research & Development end-market.
A significant development in the quarter was the spinout of Twist Bioscience’s data storage division into a separate entity, now called Atlas Data Storage. Twist Bioscience will retain a 24% stake in Atlas Data Storage and anticipates operational expenditure savings of $5 million per quarter by the fourth fiscal quarter of 2025. This strategic move is projected to contribute to positive adjusted EBITDA by the fiscal year 2026. InvestingPro analysis shows the company maintains a strong financial position with a current ratio of 4.96 and operates with moderate debt levels, earning a "GOOD" overall Financial Health score.
The company reported a gross margin of 49.6% for the second fiscal quarter, surpassing Leerink Partners’ estimate of 48.3% and the consensus estimate of 48.7%. This outperformance has increased confidence in the company’s margin outlook. The concerns regarding cash burn have been largely addressed, according to the analysts.
However, with Twist Bioscience shares trading at approximately 5 times enterprise value to projected 2026 sales—higher than the roughly 3 times multiple for its peers—Leerink Partners believes that the growth prospects are already reflected in the current stock price. This valuation assessment aligns with InvestingPro’s Fair Value analysis, which indicates the stock is slightly overvalued despite showing strong revenue growth of 25.85% over the last twelve months. This valuation, coupled with the challenges in the end markets, suggests potential downside risks. Consequently, the firm has chosen to maintain its Market Perform rating and a price target of $40.00. For deeper insights into TWST’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Twist Bioscience reported a 23% increase in revenue for the second quarter of fiscal year 2025, reaching $92.8 million, surpassing Street expectations. Despite missing EPS forecasts, the company achieved better-than-expected gross margins of 49.6%. Analysts from Evercore ISI and Barclays (LON:BARC) have maintained positive ratings on the company, with Evercore ISI trimming its price target slightly to $50 while Barclays holds a target of $45, citing strategic initiatives like the spin-off of the DNA Storage division. This spin-off, forming Atlas Data Storage, is expected to reduce cash burn by $25 million and has already secured $155 million in seed financing. TD Cowen has also reaffirmed a Buy rating with a $58 price target, highlighting the company’s resilience against industry challenges and its U.S.-centric manufacturing strategy. Twist Bioscience’s management anticipates reaching EBITDA break-even by the end of fiscal 2026, driven by strategic growth in its SynBio and NGS segments. The company projects full-year revenue guidance between $372 million and $379 million, with improved gross margin forecasts for the second half of the fiscal year.
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