不买入 TWST，估值偏高且门槛很高，对其能否延续涨势持怀疑态度。

It's time to revisit Twist Bioscience. It's been a couple years since we put out a video and deep dive into this company, and to be completely honest, I haven't watched the stock closely.

We decided to pass at that time, but one of our members reminded me of this stock just a couple weeks ago, and so I thought I'd take a fresh look at it. If you've invested somewhere in the middle there in the last five years, you've probably done really well the last couple months.

So let's take a closer look at Twist, see what's going on, why this big run-up in the stock price, and whether or not we think this run is gonna last or if it's worth consideration again in our portfolio.

As a reminder of what Twist does, they specialize in DNA synthesis using a silicon chip, a silicon platform. Twist is writing over a million pieces of DNA on a single chip, which is about the size of a mobile phone, and that reduces the number of chemicals or the reagents they would use versus the traditional method.

And over the last three years, Twist has done a good job of reducing the cost to manufacture these silicon chips, 60% reduction in cost. Waste is down about 70%, and the turnaround time, roughly 73% versus the traditional methods.

Twist has a manufacturing facility in Wilsonville, Oregon, and I can't verify who is providing these silicon chips. But they do have some public disclosures about working with Aimek on some parts of their semiconductor systems, not the DNA part, but a different ASIC used in networking for the data-based storage, which Twist has since spun off, which we'll cover here in just a moment.

But what they have said is they depend on a single source supplier for the critical component of the DNA synthesis process. So whoever that is at this point, at least in the most recent filing, single source supplier.

You can kind of think about this reading versus writing. The DNA synthesis and protein solutions is the write side. You send Twist a sequence, they build it and ship it to you.

This could be genes, fragments, a big custom set of variations in one sequence, and then they'll also grow that actual protein that the DNA codes for, and then can run tests on it.

The NGS applications is more like the read side of this. Sequencing means reading the DNA back, and before the sample goes to the sequencing machine, it has to be prepped. Twist sells the prep kits plus the panels that pull out just the stretch of DNA that you actually need.

They don't make the machines, but they work with anybody's.

And you can see that in the latest quarter, the purple bar, the DNA synthesis and protein solutions came in at around $56.6 million, which is up 39% year over year. And then the NGS portion came in at about $61.8 million, which is up 12%.

That NGS is still the bigger segment, but the DNA synthesis and protein sequencing is growing faster, and if it continues, will definitely surpass the other segment.

These are the industries that make up Twist's customers. You can see therapeutics on the left, that is the biggest growth driver, $40.4 million in this most recent quarter, up 49% year-over-year.

Diagnostics up 15%, academic and government up 32%, industry and applied materials down a little bit, about 6%, and then global supply partners down 1%.

That therapeutics industry driven largely by large pharmaceutical companies, maybe dry lab biotech companies, and then other tech companies leveraging Twist for their AI-enabled drug discovery.

That diagnostics may be liquid biopsy developers as well as population genetics companies. Academic and government, just like it sounds, maybe university or institutional scientific research.

And then that industrial, chemical companies, agriculture, and maybe some other synthetic bio companies as well.

But as you can see, the primary growth driver for Twist is AI-enabled drug discovery, that one that follows into therapeutics. A lot of these big pharma companies are spending massive amounts of dollars to research new therapies with the help of AI and get those drugs hopefully faster to market if they're successful, if the research pans out for them.

And one thing that you will no longer see with Twist is the data storage segment. That segment of Twist company was really sci-fi, storing digital files in DNA, but they spun it off in May of 2025 into a company called Atlas Data Storage.

Twist ended up licensing the tech over for a minority stake in the company, some cash, and a promissory note. And so they moved all of that off the income statement, which you'll see here in just a moment, and then just kept the equity option if this actually becomes a thing.

AI drug discovery and research is obviously what is propelling the revenue growth for Twist, and here's a look at how this works practically speaking, where they fit into the mix in AI-enabled discovery.

This is a five-step process from design to actual testing, and Twist fits into the middle there, building the DNA synthesis or building protein expressions and testing the product, practically speaking.

And the result of that initial testing feeds into more design sequencing.

The idea here is that Twist has a long runway of growth, enabling their DNA synthesis, enabling the drug discovery, and feeding that loop.

They said that they have triple digit percent growth for AI-driven drug discovery in fiscal year 2026 over fiscal year 2025, and you can definitely see that's what's coming in on the revenue chart for Twist.

And one of the reasons that the stock saw such a huge run-up in August was Anthropic published some results from a protein design campaign against 15 targets. And then Twist filed an 8-K SEC filing, noting that it was one of the independent external evaluators, meaning it manufactured the AI-designed proteins and then tested them for binding across those 15 targets.

Anthropic reported that that was a success for some of those protein binders, and so Twist stock saw a huge run-up in price.

One of the things that I think I mentioned in the last video, and I'll mention it again as a risk, and that Twist actually calls out in their own 10-K, is that does AI increase or decrease the number of physical designs that are needed to be validated?

And so this is something that I called out a couple years ago, but actually didn't end up being a problem. AI actually drove revenue growth for Twist. They actually got a lot more work, not less.

And so will that continue in the future? That's really the question. Will this AI-driven cycle of drug discovery and scientific research feed into necessitating more DNA synthesis and more business for Twist?

Or will there eventually be some type of slowdown that happens because of there being so much AI? Do they need that physical DNA synthesis as much in the future?

Here's a look at the fiscal 2026 guidance. At the midpoint, they expect revenue to be up 25% year over year for Q4 fiscal year 2026. And then for the full year fiscal year 2026, growth of 21% year over year.

They do expect that they're going to reach EBITDA breakeven in the next quarter. But up until this point, Twist has not been able to reach profitability.

Total revenue is obviously going up, but free cash flow and net income have been in the negative. But they've made some progress on their free cash flow, now down only negative nine million for this most recent quarter.

So could possibly be getting to free cash flow positive in the coming quarters if they continue this current run.

But one of the things that we've called out in the past is with a company like this burning through a lot of cash is what are they going to do as their balance sheet starts to draw down?

And you can see this here in recent quarters. This is from all the way back to 2020 until this most recent quarter in June when that ended. And their cash depleting, so they're going to have to raise some cash.

Now, one way that they've been doing this is selling shares. Back in June, they said that they had a at-the-market equity offering program of $200 million in common stock. They haven't exercised any of those yet, at least not that they've filed at this point. We'll see what the next quarter brings.

But then again in August, they announced a $300 million offering of common stock. Twist obviously trying to capitalize on this run-up in stock price, trying to refill that balance sheet.

This will obviously dilute shareholders, but will replenish that balance sheet that has definitely been depleting over the last few years.

This first one is a long-term horizon over the next 10 years. I used $456.5 million in annual revenue based on their guidance. And then I did a pretend at 20% free cash flow, brought us to 91.3 million, and then divided that by around 63 million shares that it's at right now, which gets us to a growth rate of 27% over the next 10 years, and then a terminal growth rate of 3% thereafter.

And that gets us to right around the stock price of $124 per share.

Now let's take a look at another scenario, and this is more on the guidance that the management has given us over the next five years. They said by 2031, they expect that they can get to $920 million, which is double their current revenue.

So if that was to happen over the next five years, they get to a 20% free cash flow rate of $184 million per year, divided by that same 63 million shares. That 63 million shares would obviously be if they have not diluted shareholders by selling more stock.

But that gets us to around a 30% growth rate over the next five years.

Now, is that doable? Perhaps. If AI-driven drug discovery and scientific research continues to need this physical DNA synthesis, this very well could be a run that they continue.

For us right now the valuation still looks quite rich, and these are definitely high bars to clear for Twist. I'm not entirely convinced that they're going to be able to continue this run.

We weren't buyers back when it was cheap, and now we're not buyers when it's high, but it's still on our watch list. I know some of our subscribers have had great success here in recent years with Twist.

So congratulations, glad you're seeing this come to a fruition, especially when it was a small cap bet.

But still on our watch list. We'll keep a close eye on it.