Analyst Assesses Cell-Programming Focused Ginkgo Bioworks' Positioning Amid Revenue Surge, Program Adjustments

Wednesday, Ginkgo Bioworks Holdings Inc DNA released preliminary FY23 sales of $250 million-$260 million, compared to the consensus of $258.65 million.

Preliminary cell engineering and biosecurity revenue are expected to be within the disclosed guidance range of $145 million-$150 million and up to $110 million in 2023, respectively.

New Cell Programs are expected to be within the previously disclosed guidance range of 80-85 new Cell Programs added to the platform in 2023.

William Blair sees Ginkgo's recent update as positive despite reducing its full-year program target from 100. 

The accelerated pace of program announcements is linked to a new success-based pricing model and operational enhancements. 

Ginkgo also completed the program's pilot phase with Novo Nordisk A/S NVO and completed a gene therapy collaboration with Biogen Inc BIIB.

Ginkgo's ability to combine automated data generation at scale with AI models targeted toward customer program areas is expected to be the foundation for additional pharmaceutical partnerships in 2024.

Ginkgo ended 2023 with nearly $950 million of cash and cash equivalents.

Ginkgo reported over 50% growth in cell engineering revenue from biopharma clients in 2023, reflecting market strength despite uncertain macro conditions.

The current valuation of Ginkgo's shares is at 10.3 times their projected 2024 cell engineering sales target. 

This valuation is a premium compared to other high-growth life science tools peers.

William Blair believes Ginkgo is establishing itself as a leading horizontal platform in synthetic biology, aiming to democratize cell programming access. 

However, concerns persist regarding the feasibility of growth expectations and the path toward a more robust financial model. Consequently, William Blair keeps the Market Perform.

Price Action: DNA shares are down 5.30% at $1.43 on the last check Wednesday.