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Motley Fool Issues Rare “All In” Buy Alert

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Shares of Twist Bioscience (TWST 7.93% ) , a biotech company that makes synthetic DNA-based products, including synthetic genes, antibody libraries for drug development and tools for next-generation sample preparation, jumped 25.1% in July, according to according to data from S&P Global Intelligence.

The stock closed at $34.96 on June 30, the final day of the trading month, rose to as high as $49.37 on July 21 and closed at $43.74 on July 29, the last trading day of the month. Twist's shares have a 52-week low of $25.07 and a 52-week high of $139.99 and its shares are down slightly more than 31% so far this year.

There were two prominent factors that drove up the stock's price last month. On July 14, the company announced that it was launching two monkeypox virus synthetic DNA controls, including the Congo Basin clade (genetic branch) from Central Africa and the West African clade. The controls will allow other companies developing therapies for monkeypox quality control measures for the development of next-generation sequencing (NGS) and polymerase chain reaction (PCR) assays.

The timing was good because the World Health Organization, on July 23, declared monkeypox to be a international health emergency.

The second bit of news that helped drive up Twist's shares was that Cathie Wood's ARK Innovation ETF bought an additional 156,417 shares of Twist in July, raising the ETF's number of Twist shares to 6.27 million, making it the second-largest holder of Twist shares. Not only did the purchases help raise the price but the investors who follow Wood's moves also jumped in to bring up its share price.

There are plenty of reasons to be excited about Twist's potential. The biotech company has had double-digit revenue growth the past five years and last year, improved its gross margin to 39%.

The company is working on using DNA for data storage, which has huge implications given the growing need for more data storage and something that could be the company's biggest revenue driver, with long-term archival storage being a $35 billion market within five years, according to Twist.

The company also said it expects annual revenue this year of $203 million, up from earlier estimates of between $191 million and $199 million, with gross margin of 40%.

In the short term, however, Twist isn't profitable yet. In its third quarter report, the company said it had $56.1 million in revenue, up 60% year over year and 16% sequentially. However, it reported a loss of $60.5 million, or $1.08 per share, in the quarter, compared to a net loss of $40.0 million, or $0.82 per share, for the same period last year.

Jim Halley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Twist Bioscience. The Motley Fool has a disclosure policy.

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