Ginkgo Bioworks Holdings (NYSE: DNA) stock plummeted over 17% in intraday trading following a bearish note from William Blair analyst.
Matt Larew, an analyst at William Blair, has downgraded Ginkgo Bioworks (NYSE: DNA) stock, shifting its rating from Market Perform to Underperform. The firm cited concerns over Ginkgo’s recent quarter performance and its shift in business strategy, particularly its move away from intellectual property (IP) ownership and value share.
Larew highlighted Ginkgo’s disappointing quarter results, particularly a miss in Cell Engineering and a downward revision in guidance, which continues a troubling pattern of the company falling short of its forecasts. This persistent trend has raised doubts regarding Ginkgo’s capacity to execute its business plans effectively.
Moreover, the analyst pointed out the significant impact of Ginkgo’s decision to pivot away from IP ownership, noting that this strategic shift could potentially eliminate revenue streams from milestones and royalties that were previously integral to Ginkgo’s value proposition.
The removal of the Cell Engineering program as a key performance indicator (KPI) without introducing a new volume KPI presents challenges in assessing the company’s market traction and customer growth, according to the analyst.
The analyst expressed skepticism about Ginkgo’s ability to achieve its stated targets despite viewing cost control measures positively, particularly in the current economic climate.
The downgrade comes amid Ginkgo’s shares trading at a premium compared to peers, with a multiple of 7.6 times the firm’s 2024 Cell Engineering sales target. This valuation significantly exceeds that of life science tools and contract research organizations (CROs) peers, which trade at 4.0 times and 3.5 times, respectively.
The new Underperform rating reflects William Blair’s cautious stance on the stock until Ginkgo provides vivid insights into its long-term strategy and demonstrates more consistent and measurable performance metrics.
Ginkgo Bioworks Holdings (NYSE: DNA) Stock Movement
DNA stock plunged 17.29% to close at $0.76 on Friday. Its value decreased by 20.32% this week. Trading activity has witnessed 124,256,281 (124.25 million) shares changing hands, well above the average daily volume of 32.13 million.
