Ginkgo Bioworks has Outperform rating with Raymond James

A couple of big deals just closed for bioengineering company Ginkgo Bioworks (Ginkgo Bioworks Stock Quote, Charts, News, Analysts, Financials NYSE:DNA), and that’s good news for fans of the Ginkgo, according to Raymond James analyst Rahul Sarugaser, who delivered a recent update to clients on the company, saying Ginkgo’s ability to deliver on guidance and come through on transformative acquisitions helps make the stock a winner.

Boston-based Ginkgo Bioworks, which uses its Foundry+Codebase platform to design custom-made cells for industries like pharma, agriculture and materials, closed on October 19 on the all-share acquisition of Zymergen, a synthetic biology company and up until now a competitor of Ginkgo’s. Meanwhile, on October 18, Ginkgo closed on its integration deal with pharma giant Bayer, one which will see Ginkgo acquire Bayer’s West Sacramento Biologics R&D site for $83 million, along with the advancement of the two companies’ joint venture in Joyn Bio and with Ginkgo adding Bayer as its largest cell program partner through a program that focuses on areas such as crop protection, nitrogen fixation and carbon sequestration.

On the evolving Bayer partnership, Ginkgo CEO and co-founder Jason Kelly wrote in a press release, “Ginkgo is committed to harnessing the power of programmable biology to enable sustainable food production and food security worldwide. We look forward to partnering with Bayer and other innovative companies, and to bringing more applications on to Ginkgo’s expanded agricultural biologicals platform so that growers worldwide can develop breakthrough products.”

Sarugaser said the two deals plus Ginkgo’s recently announced completion of a biodefence tech development initiative sponsored by the US government are positives for the company. Now one year into its tenure as a public company, Ginkgo has maintained a perfect record of meeting and exceeding both revenue guidance and cell program count, Sarugaser said.

“We see Ginkgo’s capacity to quickly close these transformative deals with Bayer and Zymergen (on very favourable terms) as another key ingredient of big-league credibility,” Sarugaser wrote in his October 19 report.

“Looking forward, we anticipate the integration of Zymergen and Bayer assets as significant capacity- and capability-builders that Ginkgo will leverage to further amplify its pipeline, thereby accelerating its active cell program count. (We witnessed exactly this in Ginkgo’s recent biocatalyst deal with Merck, where expertise in fungal cell engineering was highly valued: a product of Ginkgo’s 2021 acquisition of Dutch DNA),” he said.

“More programs mean faster accrual of R&D Rev. and, ultimately, a steady, intensifying flow of downstream value streams: equity + royalties,” Sarugaser wrote.

With the update, Sarugaser maintained an “Outperform” rating on Ginkgo Bioworks, which currently is year-to-date down about 67 per cent.