Investors looking for stocks that can produce dramatic gains over the next 12 months want to turn their attention to the biotechnology industry. Wall Street analysts tasked with following a synthetic biology company called Ginkgo Bioworks (NYSE: DNA) think it can more than double your money.
Investment bankers also have high hopes for Agenus (NASDAQ: AGEN). The latest price targets on the cancer drug developer suggest it can shoot more than 700% higher.
Ginkgo Bioworks
Shares of Ginkgo Bioworks are down about 54% from a peak they hit last summer. Investment bank analysts at TD Cowen think it can rebound. In March, the bank lowered its price target on the stock to $3 per share. The lowered target still implies a gain of over 150% from the stock’s recent price.
Ginkgo Bioworks’ main operation involves breeding new microorganisms for clients that include the U.S. government. For example, the Defense Advanced Research Projects Agency recently gave the company a $6 million contract to develop new materials that control the physical properties of ice crystals in cold work environments.
Ginkgo makes money through a combination of upfront fees, milestone payments, and royalties. Lofty Wall Street estimates regarding its future involve the eventual realization of heaps of downstream revenue from third parties.
Ginkgo could eventually receive around $2.4 billion in potential downstream payments from its clients, but don’t hold your breath waiting for this revenue to materialize.
In 2021, Ginkgo Bioworks raised $1.6 billion in its stock market debut. It used that cash to begin dozens of foundry projects for a cornucopia of different clients, but this isn’t translating into increasing downstream revenue. Last year, downstream value share decreased significantly even though the company finished 2023 with 80 completed programs, plus 162 programs that are still active.
Despite signing up lots of new clients, Ginkgo Bioworks lost a stunning $893 million last year. No matter how high your risk tolerance, it’s best to keep this stock on a watch list until after its foundry service…
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