Twist Bioscience Stock To $32?

Twist Bioscience (TWST) stock has fallen 6.1% during the past day, and is currently trading at $45.40. Our multi-factor assessment suggests that it may be time to sell TWST stock. We have, overall, a pessimistic view of the stock, and a price of $32 may not be out of reach. We believe there is a near-equal mix of good and bad in TWST stock given its overall Moderate operating performance and financial condition. But keeping in mind its High valuation, we think that the stock is Unattractive.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $2.8 Bil in market cap, Twist Bioscience provides synthetic DNA products manufactured using a silicon chip-based platform, offering synthetic genes, sample preparation tools, antibody libraries for drug discovery, and DNA digital data storage solutions.

[1] Valuation Looks High

This table highlights how TWST is valued vs broader market. For more details see: TWST Valuation Ratios

[2] Growth Is Very Strong

• Twist Bioscience has seen its top line grow at an average rate of 22.0% over the last 3 years
• Its revenues have grown 19% from $330 Mil to $392 Mil in the last 12 months
• Also, its quarterly revenues grew 16.9% to $104 Mil in the most recent quarter from $89 Mil a year ago.

This table highlights how TWST is growing vs broader market. For more details see: TWST Revenue Comparison

[3] Profitability Appears Very Weak

• TWST last 12 month operating income was $-135 Mil representing operating margin of -34.4%
• With cash flow margin of -13.0%, it generated nearly $-51 Mil in operating cash flow over this period
• For the same period, TWST generated nearly $-77 Mil in net income, suggesting net margin of about -19.6%

This table highlights how TWST profitability vs broader market. For more details see: TWST Operating Income Comparison

[4] Financial Stability Looks Very Strong

• TWST Debt was $98 Mil at the end of the most recent quarter, while its current Market Cap is $2.8 Bil. This implies Debt-to-Equity Ratio of 3.5%
• TWST Cash (including cash equivalents) makes up $198 Mil of $638 Mil in total Assets. This yields a Cash-to-Assets Ratio of 31.0%

[5] Downturn Resilience Is Weak

TWST has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• TWST stock fell 94.5% from a high of $207.97 on 20 January 2021 to $11.49 on 2 May 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $58.88 on 23 July 2024 , and currently trades at $45.40

 
2020 Covid Pandemic

• TWST stock fell 43.9% from a high of $35.15 on 6 March 2020 to $19.71 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 6 May 2020

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read TWST Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

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