Saying he’s still got a lot of confidence in the company, Raymond James portfolio manager Rahul Sarugaser reiterated in a Friday report an “Outperform” rating on Ginkgo Bioworks (Ginkgo Bioworks Stock Quote, Charts, News, Analysts, Financials NYSE:DNA), saying a recent equity offering shouldn’t scare away investors, despite first impressions. Ginkgo Bioworks, a cell programming biotech company that designs and builds custom living cells, saw its share price drop this week after announcing a sale of shares for gross proceeds of $100 million plus up to $15 million on a 30-day option. The company said the proceeds will go towards offsetting the cash used to finance its Bayer CropScience acquisition. Sarugaser’s take is that while Ginkgo shares have been pummelled with the rest of the tech and biotech market over the past year, part of the ongoing investor faith in the company was in its $1.4-billion cash balance which would allow the science to keep progressing without the need for equity raises — hence the confusion on the new issue of shares. Sarugaser said, “hile dilution has been nominal (~two per cent), management has now set a precedent: DNA is willing to finance (even small amounts) at current prices. This financing has, as we hear from investors, weakened the perception that DNA’s current balance sheet will protect them. So, with this recent turn in sentiment, we’ve seen the stock sell off (down versus NYSE down ) and short interest ramp up.” Sarugaser said it may take some time for Ginkgo management to remedy the perception issue. For the present, the analyst has adjusted estimates in his valuation, resulting in a reduction in his target price from $10.50 to $6.00, which at the time of publication represented a projected one-year return of 178 per cent. “We have unflinching confidence in DNA’s long-term prospects given our overall thesis that biology is this century’s new manufacturing, and DNA is the spider at the centre of this massive, growing new web. This said, there remain skeptics in the market about DNA’s ability to deliver on the grand promise that is the future of bioengineering and bio-manufacturing, which has also contributed to the company’s stock price decline this past year,” he wrote. Looking ahead, Sarugaser is now estimating 2022 revenue of $458 million and negative EBITDA of $182 million. Ginkgo Bioworks reported its third quarter 2022 financials on November 14, showing $66 million in revenue and an adjusted EBITDA loss of $70 million.