Twist Bioscience (TWST) recently launched its Complex Genes offering, which supports DNA sequences up to 7,000 base pairs and accepts designs that were previously difficult to manufacture at scale for drug discovery applications.

That Complex Genes launch comes on the back of strong recent momentum, with an 87% year to date share price return and a very large 3 year total shareholder return of 320.33%, although the 5 year total shareholder return is down 43.56%, hinting that sentiment has shifted more recently. The latest 7 day share price return of 23.18% and 90 day share price return of 25.95% suggest investors are reacting to growth expectations and reassessing risk around Twist Bioscience’s opportunity in AI supported drug discovery.

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With the stock up 87% year to date and now trading only about 6% below the average analyst price target of US$64.44, you have to ask: is there still upside here, or is future growth already priced in?

Most Popular Narrative: 4.4% Undervalued

Twist Bioscience last closed at $60.57, while the most followed narrative pegs fair value around $63.33, with that gap hinging on future earnings power and margins.

Significant improvements in gross margin (now above 50%) through volume leverage, process improvements, and increased vertical integration signal ongoing margin expansion and a clear near term path toward adjusted EBITDA breakeven, indicating robust future earnings potential.

Want to see what sits behind that margin story and fair value? Revenue pacing, future profitability, and a rich earnings multiple are all at the core.

Result: Fair Value of $63.33 (UNDERVALUED)

However, that upside story still depends on Twist reducing ongoing losses and keeping key NGS customers on board, so any setback in margins or customer concentration could quickly challenge it.

Another Angle on Valuation

The analyst narrative points to about 4.4% upside to fair value at $63.33, but the P/S ratio tells a different story. Twist Bioscience trades around 9.2x sales versus a fair ratio of 4.5x and a US Biotechs average of 10.7x, which leaves you weighing how much sentiment might already be embedded in the price.

Next Steps

With sentiment in this article pointing to both risks and rewards, it makes sense to review the data yourself and stress test the thesis before the market moves on. To balance both sides of the story, take a closer look at the 2 key rewards and 2 important warning signs.

Looking for more investment ideas?

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• Get ahead of the crowd by reviewing the screener containing 21 high quality undiscovered gems before they sit on everyone else's radar.

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.