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Ginkgo Bioworks is a Buy, says Raymond James

The stock has fallen hard over the past couple of years, but Raymond James Financial analyst Rahul Sarugaser is staying optimistic on Ginkgo Bioworks (DNA Stock Quote, Charts, News, Analysts, Financials NYSE:DNA), saying in a Friday report to clients that it’s still early innings for the cell design company. 

Boston-based Ginkgo Bioworks reported its first quarter 2023 results on Wednesday, saying the company added 13 new cell programs to its Foundry platform over the quarter, while its Concentric biosecurity platform generated $47 million in revenue. Total revenue was $81 million, less than half of the $168 million generated a year earlier, which the company attributed to a ramp-down in its K-12 testing in Ginkgo Biosecurity.

“There is no doubt that we are going to be living in a challenging market environment for a while, but Ginkgo was built for these moments – we have worked hard to give ourselves a margin of safety so that we can relentlessly focus on our mission to make biology easier to engineer,” said Jason Kelly, co-founder and CEO, in a statement. “We’re starting to see the flywheel really turn, and I look forward to bringing you more updates of our technical progress and customer success.”

Looking at the Q1 numbers, Sarugaser said Ginkgo’s $81 million topline was a beat of his estimate at $59 million and the consensus call at $71 million, while an adjusted EBITDA loss of $100 million was larger than Sarugaser’s forecast at negative $56.8 million and the Street at negative $80.2 million. Sarugaser noted that DNA finished the quarter with cash and short-term investments of $1,206.1 million and no debt.


Overall, Sarugaser said he remains confident in the DNA stock story, as business will naturally be lumpy in the early days. He said DNA continues to onboard customers across a range of industries and continues to drive solid core revenue in cell engineering services. 

“DNA is, principally, an enterprise sales organization, and management maintain that they have good visibility on the new program pipeline and upcoming milestones, but Q/Q timing is difficult to pin down,” he said.

“We remain confident in DNA’s business development capabilities and capacity to successfully execute its programs, particularly after interviewing several of DNA’s extant and prospective customers at the company’s Ferment conference last month: DNA’s growing network effect was palpable, and its Foundries’ use cases are becoming clearer and clearer,” Sarugaser wrote.

With the update, Sarugaser maintained an “Outperform” rating on the stock and one-year target of $5.00 per share, which at press time represented a projected return of 270 per cent.

DNA Stock News 2023

On May 9, Ginkgo announced a partnership with Octarine Bio, a synthetic biology company to develop natural dyes, noting that synthetic dyes have been linked to negative effects to human health and for the environment.

“Natural colors and dyes constitute a significant and expanding market, especially given the heightened awareness from companies and the concerns of consumers about the harmful effects of conventional manufacturing processes,” said Ena Cratsenburg, Chief Business Officer at Ginkgo Bioworks. “This is a robust opportunity to contribute to the sustainability of the fashion industry, and we are excited to be working with Octarine as we aim to produce a new class of safer, high-performing colors and dyes that will appeal to consumers and companies worldwide.”

“We are thrilled to work with Ginkgo to improve the bio-based production process for our tryptophan program, focusing on a class of highly sought after natural colors and dyes in difficult to source color spectra,” said Dr. Nethaji Gallage, Co-founder & CEO at Octarine. “We see tremendous potential to apply these natural pigments as bio-based dyes, one of the fastest growing categories in the global textile market, and look forward to leveraging the Ginkgo platform to accelerate its development.”

A day DNA announced that it was partnering with  Boehringer Ingelheim to work on therapies for hard to treat diseases. Ginkgo noted that it has built one of the largest metagenomics databases in the world,  buoyed by its recent acquisition of Zymergen. The company said its database comprises over three terabases of sequence data and over two billion proprietary protein sequences from a variety of microbes, creating a unique foundation for the discovery of novel therapeutic molecules.

“Ginkgo is well-positioned to help partners like Boehringer Ingelheim complement their drug discovery efforts particularly when it comes to natural product discovery,” said Jason Kelly, CEO and co-founder at Ginkgo Bioworks. “We are thrilled to work with Boehringer Ingelheim leveraging our Foundry and Codebase to unlock new possibilities in biopharma innovation.”

About Ginkgo Bioworks

Ginkgo Bioworks is the leading horizontal platform for cell programming, providing flexible, end-to-end services that solve challenges for organizations across diverse markets, from food and agriculture to pharmaceuticals to industrial and specialty chemicals. Ginkgo’s biosecurity and public health unit, Concentric by Ginkgo, is building global infrastructure for biosecurity to empower governments, communities, and public health leaders to prevent, detect and respond to a wide variety of biological threats. For more information, visit ginkgobioworks.com and concentricbyginkgo.com, read our blog, or follow us on social media channels such as Twitter (@Ginkgo and @ConcentricByGBW), Instagram (@GinkgoBioworks and @ConcentricByGinkgo), or LinkedIn.


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About The Author /

Jayson is a writer, researcher and educator with a PhD in political philosophy from the University of Ottawa. His interests range from bioethics and innovations in the health sciences to governance, social justice and the history of ideas.
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