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Ginkgo Bioworks has a huge upside, says Raymond James

Raymond James analyst Rahul Sarugaser is feeling confident in Ginkgo Bioworks Holdings (Ginkgo Bioworks Stock Quote, Chart, News NYSE:DNA), maintaining his “Outperform 2” rating and target price of $11.50/share for a projected return of 385.2 per cent in an update to clients on Tuesday.

Boston-based Ginkgo Bioworks builds bespoke living cells through the use of its Foundry + Codebase platform, where Foundry is the suite of physical infrastructure on which Ginkgo undertakes its cell programming work, while Codebase is Ginkgo’s expanding catalogue of institutional biological knowledge it uses to execute new projects.

Sarugaser’s latest analysis arrives after Ginkgo announced it has achieved productivity targets for one of its cell programs with backer Cronos Group geared toward the production of THCV by fermentation, triggering an equity milestone of approximately 2.2 million Cronos Group shares, which translates to approximately $6 million.

“We appreciate that DNA continues to hit productivity milestones for CRON, working through this family of high-value small molecules with increasing cadence,” Sarugaser said. “Today’s announcement marks DNA’s third success in engineering highly productive cells to produce rare cannabinoids; CRON now adds THCV to its list of pure, rare, high-value cannabinoids in its portfolio, joining CBG and CBGV.”


Ginkgo’s productions with Cronos have proven efficient after hitting a three-month productivity target for CBGV and hitting the THCV target on a six-month timeline, with Sarugaser appreciating Ginkgo’s capacity to efficiently leverage its Codebase and in-house IP toward new projects.

“While these are closely related molecules contained within a single partner’s commissioned cell programs, we believe DNA’s partnership with CRON provides an excellent case study—proof in the pudding, as we see it—for how DNA’s development lead-times (and costs) may materially reduce in the future, and how its capacity may materially increase,” Sarugaser said.

Ginkgo Bioworks and Cronos Group initially announced their partnership in September 2018, with Ginkgo nearing the halfway point of its mandate to produce eight target cannabinoids through engineered organisms, with Cronos Group paying US$100 million.

“Working with Cronos to develop innovations in cannabis is an opportunity for us to apply synthetic biology in a way that is helping bring the cannabis industry forward and make a real impact on its market and the customers it serves,” said Jason Kelly, CEO and cofounder of Ginkgo Bioworks in a joint press release on June 21. “The progress we’ve made thus far in our collaboration is a true testament to both the potential of synthetic biology and the world-class teams at Cronos and Ginkgo.”

Sarugaser maintained his 2022 revenue projection of $381 million for a potential year-over-year increase of 21.3 per cent, while his 2023 projection of $420 million suggests year-over-year growth of 10.2 per cent. (All figures in US dollars.)

In terms of valuation, Sarugaser forecasts the company’s EV/Revenue multiple to drop from the reported 18.9x in 2021 to a projected 15.6x in 2022, then to a projected 14.1x in 2023.

Meanwhile, with continued research and development for new programs, Sarugaser continues to forecast EBITDA losses, setting loss projections of $130 million and $142 million for 2022 and 2023, respectively.

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About The Author /

Geordie Carragher is a staff writer for Cantech Letter
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