This is biotech's billion-dollar bet & it just exceeded the target set and it raised the outlook in the 3rd quarter results during a turbulent period in the market.
Twist Bioscience Corporation (NASDAQ: TWST) stands as a beacon of innovation in the realm of synthetic biology and DNA manufacturing. From its inception in 2013, this South San Francisco-based powerhouse has revolutionized the biotechnology landscape with its cutting-edge platform for producing high-quality synthetic DNA.
At the heart of Twist's operations lies a diverse portfolio of synthetic DNA-based products, ranging from custom genes and DNA libraries to oligonucleotide pools and next-generation sequencing tools. The company's proprietary silicon-based DNA synthesis technology has shattered previous industry limitations, enabling the rapid production of custom DNA sequences at unprecedented scales and quality.
Twist's recently announced Q3 FY2024 results paint a picture of a company in ascendance. With robust revenue growth, markedly improved margins, and enhanced operational efficiency, Twist has not only met but exceeded market expectations. The company's optimistic guidance for Q4 further underscores its confidence in its strategic direction and market position. However, the path to profitability remains a challenge, as evidenced by ongoing net losses and adjusted EBITDA deficits – a common narrative for high-growth companies in the biotech sector.
Reflecting on the past year, Twist's market performance has been nothing short of remarkable. A year ago, our AI-driven forecast boldly placed TWST at the top of our 1-year stock picks, when it was trading at a modest $21.22. Fast forward 365 days and the stock price has skyrocketed to $42.97, more than doubling in value. This impressive trajectory not only validates the accuracy of our AI predictions but also highlights Twist's strong market momentum and investor confidence in its long-term potential. The image below showcases the top 5 stocks from our previous year's forecast, providing a visual representation of Twist's stellar performance in context with other forecast leaders.
Top 5 Average ROI: 108.45%
Hit Ratio: 100% Time Horizon: 365 Days (12-Months)
S&P 500 Performance: 18.76%
AI-Forecast Market Outperformance: 89.69%
Forecast Period: August 3rd, 2023, to August 2nd, 2024
The Top 5 Performance Visualized
1. Twist Bioscience Corp (NASDAQ: TWST): 102.50%
2. Tenet Healthcare Corp (NYSE: THC): 91.89%
3. Viking Therapeutics Inc (NASDAQ: VKTX): 283.86%
4. Palantir Technologies Inc (NYSE: PLTR): 32.80%
5. Alphabet Inc Class C (NASDAQ: GOOG): 31.80%
Our predictive AI application showcased remarkable accuracy in stock selection, identifying a portfolio of five stocks that achieved an extraordinary average return on investment (ROI) of 108.45%. At the forefront was Viking Therapeutics Inc (NASDAQ: VKTX), which delivered an exceptional 283.86% return.
The application's performance was flawless, with a 100% hit ratio as each of the five selected stocks yielded positive returns. This success is particularly noteworthy when juxtaposed against the S&P 500 index, which, despite a robust performance of 18.76% during the same period, was significantly outpaced by our AI-selected portfolio.
This striking outperformance underscores the potential of our predictive AI in navigating the complexities of the stock market and identifying high-potential investment opportunities like Twist Bioscience Corporation (NASDAQ: TWST).
TWST Q3 Breakthrough
Twist Bioscience reported record revenue of $81.5 million in Q3 FY2024, representing a substantial 28% increase from $63.7 million in Q3 FY2023. This growth exceeded the company's previous guidance, demonstrating strong market demand for their products and services.
Segment Performance:
SynBio revenue: Grew to $33.0 million, up from $25.9 million year-over-year.
NGS revenue: Increased to $43.4 million from $33.2 million year-over-year.
Biopharma revenue: Slight increase to $5.1 million from $4.6 million year-over-year.
The NGS segment showed particularly strong performance, driving a significant portion of the overall revenue growth.
Gross Margin Improvement: Gross margin for Q3 FY2024 improved significantly to 43.3%, up approximately 900 basis points from 34.4% in Q3 FY2023. This substantial improvement indicates enhanced operational efficiency and potentially better pricing power.
Operational Metrics:
Orders received grew to $85.3 million, up from $63.8 million in the same period last year.
The company shipped products to approximately 2,300 customers, an increase from 2,200 in Q3 FY2023.
Approximately 212,000 genes were shipped, up from 171,000 in the same quarter last year.
These metrics suggest strong customer growth and increased product volume, supporting revenue growth.
Financial Position:
As of June 30, 2024, Twist had $289.4 million in cash, cash equivalents, and short-term investments. This represents a modest reduction of approximately $4 million from the previous quarter, indicating a relatively controlled cash burn.
Net Loss and Adjusted EBITDA:
Net loss attributable to common stockholders was $85.6 million ($1.47 per share), compared to $57.4 million ($1.01 per share) in Q3 FY2023.
Adjusted EBITDA loss improved to $22.0 million from $29.6 million year-over-year.
The company reported a non-GAAP net loss of $40.6 million, excluding a $45.0 million impairment related to Biopharma assets.
While the net loss increased, the improvement in adjusted EBITDA suggests better underlying operational performance when excluding non-cash and one-time items.
Updated Fiscal 2024 Guidance: Twist has raised its full-year revenue guidance to $310-311 million, up from the previous $300-304 million, indicating confidence in continued strong performance. The company also expects to achieve a gross margin of approximately 42.0% for the full fiscal year.
Q4 FY2024 Outlook:
For the upcoming quarter, Twist projects:
Revenue of $82-83 million
Gross margin of approximately 44%
Adjusted EBITDA loss of $20 million
This guidance suggests continued revenue growth and margin improvement. The company's focus on expanding its product portfolio, particularly in high-growth areas like NGS and synthetic biology, appears to be paying off. The improving gross margins suggest economies of scale are being realized as the business grows.
While the $45 million impairment charge related to Biopharma assets is concerning, the core business segments of SynBio and NGS are showing robust growth. The company's strong cash position provides a buffer for continued investment in growth initiatives.
Investors should monitor Twist's progress toward profitability, particularly its ability to continue improving gross margins and reducing adjusted EBITDA losses. The company's innovative product offerings and expanding customer base position it well in the rapidly growing synthetic biology market, but achieving sustainable profitability will be crucial for long-term success.
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Life is better when you can be bullish.
Sources: 1. Twist Bioscience Investor Relations, "Twist Bioscience Reports Fiscal Third Quarter 2024 Financial Results" (2024)
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