On Friday, BTIG made a significant adjustment to the price target of Ginkgo Bioworks Holdings Inc (NYSE: NYSE:DNA), raising it to $7.00 from a previous effective target of $0.20. Despite the increase, the firm maintained its Sell rating on the biotech company's stock.
The adjustment comes after Ginkgo Bioworks completed a 1-for-40 reverse stock split, which substantially reduced the company's share count from approximately 2 billion to around 51 million. The new price target reflects a slightly lower multiple used by BTIG to value the business, taking into account the recent structural changes in the company's stock.
BTIG's analyst noted that while the price target has been updated, the firm's revenue and net loss estimates for Ginkgo Bioworks remain unchanged. The analyst pointed out that the decision to maintain the Sell rating is due to a desire for more visibility on the company's ability to monetize its cell engineering programs across its various business segments.
Despite the cautious stance on the stock, BTIG acknowledged Ginkgo Bioworks' substantial cash reserves, with the company holding $730 million on its balance sheet. This financial position could provide Ginkgo with a buffer as it continues to develop and potentially monetize its technologies.
The revised price target and maintained Sell rating reflect a nuanced view of Ginkgo Bioworks' prospects, balancing the effects of the reverse stock split and the firm's current financial standing with the need for clearer signs of successful monetization efforts.
In other recent news, Ginkgo Bioworks has experienced various significant developments. Goldman Sachs (NYSE:GS) has revised Ginkgo Bioworks' price target to $7 from $12 due to slower revenue growth. The company's revenue and earnings per share forecasts remain unchanged for the years 2024, 2025, and 2026, with projected revenues of $187.0 million, $189.7 million, and $201.7 million, respectively.
Ginkgo Bioworks has also enacted a one-for-forty reverse stock split and made amendments to its corporate charter. These changes aim to consolidate shares and potentially boost the stock's market price. Additionally, the company has introduced officer exculpation provisions, providing legal protection to its officers against certain types of lawsuits.
The company reported a decrease in cell engineering revenue to $36 million, a 20% drop from the previous year, while biosecurity revenue stood at $20 million. Despite the decline, the company reaffirmed its full-year guidance, expecting cell engineering revenue between $120 million to $140 million.
In response to these financial results, Ginkgo Bioworks is implementing cost reduction strategies, anticipating over $85 million in annualized savings.
InvestingPro Insights
In light of BTIG's recent assessment of Ginkgo Bioworks Holdings Inc, additional insights from InvestingPro suggest a mixed financial picture. With a market capitalization of approximately $462.39 million, Ginkgo Bioworks is navigating challenging waters. The company's revenue has seen a significant decline of 43.45% over the last twelve months as of Q2 2024, indicating potential headwinds in sales growth. Moreover, the company's stock has experienced a notable downturn, with a 1-month price total return of -31.11% and a 6-month return of -84.28%, underscoring the recent bearish sentiment among investors.
InvestingPro Tips highlight that Ginkgo Bioworks holds more cash than debt, which aligns with BTIG's recognition of the company's substantial cash reserves. However, analysts are concerned about the company's cash burn rate and do not anticipate profitability this year, echoing BTIG's cautious stance. Furthermore, the stock's valuation implies a poor free cash flow yield, which may be a point of consideration for potential investors.
For those interested in a deeper analysis, InvestingPro offers additional tips on Ginkgo Bioworks' financial health and stock performance, which can be accessed through their platform, providing investors with a comprehensive tool for informed decision-making.
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