Twist Bioscience's Growth Spurt Faces an Overvalued Reality

The biotech sector is all about high-risk, high-reward plays, and twist bioscience (TWST) has been a poster child for explosive growth. But here’s the rub: the company’s stock is flying so high that even a bull like me has to ask—is this one overcooked? Let’s dive in.

The Growth Machine
Twist just reported Q1 2025 results that scream “buy” to the optimists. Revenue hit $88.7 million, up 24% year-over-year, with all three key segments—SynBio, NGS, and Biopharma—hitting growth targets. SynBio, which makes synthetic genes, surged 28%, fueled by its “Express genes” portfolio and a wave of new customers. NGS, used in liquid biopsy and rare disease testing, jumped 23%, while Biopharma (think drug discovery tools) grew 10%.

Regionally, Twist is conquering the globe. EMEA (Europe, Middle East, Africa) revenue soared 33%, while the Americas grew 22%—a sign that this company isn’t just a U.S. play. Even Asia Pacific, though slower at 6%, shows steady progress.

Margin magic is also in play. Gross margins hit 48.3%, up from 40.5% last year, thanks to process optimizations. Management aims for over 50% by Q4 2025, which could finally push this company into profitability.

The Valuation Hurdle
But here’s where the caution flags come up. Twist’s P/S ratio is 6.9x, well above its peers like ACADIA Pharmaceuticals (2.5x) and Veracyte (5.3x). The broader biotech industry’s average P/S is 9.6x, so Twist is actually cheaper there—but compared to its direct competitors, it’s pricey.

Analysts love it, though. The 12-month price target is $50.74, implying a 32% upside from recent prices. But wait—here’s the kicker. A discounted cash flow (DCF) model says the fair value is just $4.77 per share, meaning the stock is 704% overvalued at current prices. That’s a screaming “SELL” from the math.

The P/E ratio is -10.56, meaning Twist is still losing money (though narrowing its losses). The company’s adjusted EBITDA improved to a $16.3 million loss, but breakeven remains years away.

The Risks That Keep Me Awake at Night
- Overvaluation Alert: The DCF isn’t the only worry. Twist’s P/S is 35% higher than peers, and its stock price has surged 120% over the past two years. That’s a lot of hope baked into the price.
- Execution or Bust: DNA data storage? Biologics drug discovery? These are moonshot bets. If Twist falters on these, the stock could crater.
- The Tariff Wildcard: While Twist’s U.S. manufacturing gives it an edge over China-reliant rivals, geopolitical risks like retaliatory tariffs could still bite.

The Bottom Line
Twist Bioscience is a growth powerhouse with a 24% revenue surge, geographic dominance, and a path to better margins. But the numbers don’t lie—the stock is significantly overvalued by traditional metrics.

Investors should ask: Is 6.9x sales justified for a company still losing money? The DCF says no, and the P/S premium over peers is a red flag.

My Take:
If you’re a long-term growth investor and can stomach volatility, Twist’s moonshots (like DNA storage) might pay off. But for most, this is a wait-and-see stock. Let the market cool off—or let Twist hit those EBITDA breakeven targets—before jumping in.

The biotech revolution is coming, but right now, Twist’s valuation is running way ahead of itself.