These Analysts Think Ginkgo Bioworks Holdings, Inc.'s (NYSE:DNA) Sales Are Under Threat
The latest analyst coverage could presage a bad day for Ginkgo Bioworks Holdings, Inc. (NYSE:DNA), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the latest downgrade, the seven analysts covering Ginkgo Bioworks Holdings provided consensus estimates of US$232m revenue in 2024, which would reflect a discernible 7.8% decline on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 31% to US$0.31 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$280m and losses of US$0.30 per share in 2024. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
Check out our latest analysis for Ginkgo Bioworks Holdings
The consensus price target fell 36% to US$1.97, implicitly signalling that lower earnings per share are a leading indicator for Ginkgo Bioworks Holdings' valuation.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with a forecast 7.8% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 27% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.4% annually for the foreseeable future. It's pretty clear that Ginkgo Bioworks Holdings' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Ginkgo Bioworks Holdings. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Ginkgo Bioworks Holdings going forwards.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Ginkgo Bioworks Holdings analysts - going out to 2026, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
