The recent testing of Claude designed proteins, which bound to 14 of 15 targets in work involving Twist Bioscience (TWST), has drawn fresh attention to how AI could influence end to end drug development.

Twist Bioscience’s share price has reacted strongly to the Claude protein news and wider interest in AI driven drug discovery, with a 30 day share price return of 62.82% and a year to date share price return of 339.61%, while the 1 year total shareholder return of 438.34% points to powerful momentum that has unfolded over a longer period.

If you are looking for more AI related opportunities in this area, it could be worth scanning other healthcare AI stocks using the 42 healthcare AI stocks

After a surge like this, the key issue for Twist Bioscience is whether today’s price still leaves enough potential upside to justify the volatility you are taking on. The next step is to weigh that against what the current valuation implies.

Most Popular Narrative: 35.2% Overvalued

The most followed Twist Bioscience narrative puts fair value at $105.30, which is below the last close of $142.39, and frames the recent rally as stretching expectations.

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.

Revenue growth assumptions, margin expansion targets, and a rich future earnings multiple all sit behind this fair value. Want to see how those pieces connect.

Result: Fair Value of $105.30 (OVERVALUED)

However, Twist Bioscience still faces risks, including concentrated NGS revenue among a few large customers and ongoing losses that could eventually require fresh capital and dilute shareholders.

Another View on Twist Bioscience’s Valuation

The analyst narrative suggests Twist Bioscience is 35.2% overvalued at $142.39 compared with a fair value estimate of $105.30. Our DCF model uses a different set of assumptions and indicates a future cash flow value of $204.65, which implies the stock is trading below that estimate today. Which assumptions do you consider more reasonable?

To review how this cash flow view is constructed and stress test the inputs yourself, see the Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Twist Bioscience for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 52 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With sentiment on Twist Bioscience clearly divided between opportunity and risk, now is a good time to review the details yourself and decide where you stand. To check the balance of potential upside and downside in one place, start with the 2 key rewards and 3 important warning signs.

Looking for more investment ideas beyond Twist Bioscience?

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• Spot potential value gaps quickly by checking companies that screen as 52 high quality undervalued stocks.
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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.