Last Update 10 Jan 26

Fair value Decreased 17%

DNA: Future Returns Will Rely On Multi Year Execution And Cost Discipline

Analysts have trimmed their price target on Ginkgo Bioworks Holdings to $12 from $14, citing a reset in fair value assumptions to $10 and updated views on growth and margins, while still emphasizing the importance of clear multi year frameworks and multiple avenues for potential upside as sector sentiment improves.

Analyst Commentary

Bullish Takeaways

Bullish analysts view the reset to a US$12 price target as aligning the stock more closely with updated fair value assumptions, which can reduce the risk of expectations getting too far ahead of execution.
The focus on clear multi year frameworks is seen as a positive for valuation, as it gives investors a better way to connect long term growth aspirations with concrete milestones.
Multiple avenues for potential upside are highlighted as important for reducing reliance on any single growth driver, which can support the case for a premium to peers if execution tracks guidance.
Improving sector sentiment, combined with 2026 guidance updates, is viewed as a chance for the company to better frame its long term margin and growth profile in a way that supports the current valuation reset.

Bearish Takeaways

Bearish analysts point to the cut in the price target from US$14 to US$12 as a signal that prior growth and margin expectations may have been too optimistic.
The reference to "derisked growth assumptions" implies that some prior forecasts around future revenue and profitability might now be seen as harder to achieve, adding caution to forward estimates.
Execution risk remains a concern, as the company needs to show that its multi year frameworks can translate into measurable progress, especially as investors scrutinize 2026 guidance.
Sector recovery is still a key swing factor, and if sentiment stalls or reverses, the multiple that investors are willing to pay on future growth could come under pressure despite the revised fair value reset.

What's in the News

Ginkgo Bioworks partnered with Carnegie Mellon University on ARPA-H's POSEIDON program to help develop an orally administered, tumor-sensing pill and an at-home cancer screening device, using its cell and enzyme engineering capabilities for new diagnostic tools. (Key Developments)
The company and Agricen completed their first collaboration to create a lower-cost, more efficient fermentation process for complex bacterial strains in a soil amendment product, aiming to support wider use of biological solutions in agriculture. (Key Developments)
Ginkgo joined Deep Origin in a 4.5-year ARPA-H funded CATALYST program project called PREDICTS, using its Datapoints platform to generate structured data sets for AI driven drug safety assessments across multiple cell and tissue types. (Key Developments)
The company secured a four-year contract of up to US$47m from the Environmental Molecular Sciences Laboratory at PNNL to co design and build a High Throughput Automated Phenotyping Platform that is intended to automate end to end microbial and microbiome workflows. (Key Developments)
Ginkgo extended its multi-year partnership with Bayer to continue developing agricultural biological products focused on microbial nitrogen fixation, with Bayer retaining commercialization rights while Ginkgo supports discovery and optimization work across crop applications. (Key Developments)

Valuation Changes

Fair Value: Reduced from US$12.00 to US$10.00, a decline of about 17% in the core valuation anchor.
Discount Rate: Increased slightly from 9.26% to 9.66%, indicating a modestly higher required return on the stock.
Revenue Growth: Lowered from 5.22% to 2.71%, reflecting more conservative expectations for future top line expansion.
Net Profit Margin: Adjusted marginally from 15.80% to 15.65%, suggesting a relatively stable long-run profitability assumption.
Future P/E: Increased from 23.21x to 27.56x, indicating a higher multiple applied to earnings despite more cautious growth inputs.

Overly optimistic revenue and margin expectations face obstacles from slow sector adoption, underused lab capacity, and challenges in monetizing new AI and data offerings.
Regulatory, geopolitical, and competitive pressures may limit long-term growth, especially as customer acquisition and core-product commoditization risks increase.
Transition to scalable platform, strong financial flexibility, and focus on automation and AI tools position Ginkgo for diversified growth, recurring revenues, and long-term competitive advantage.

Catalysts

About Ginkgo Bioworks Holdings

Develops a platform for cell programming in the United States.What are the underlying business or industry changes driving this perspective?

Investors may be overestimating the speed and magnitude by which Ginkgo's expansion into life science tools and automated lab systems will convert into sustainable revenue growth, given the company's reliance on adoption of novel general-purpose automation platforms in a historically slow-moving, risk-averse sector-potentially leading to overoptimistic revenue projections over the next several years.
The market appears to be assuming rapid margin expansion driven by automation and cost reductions, but substantial underutilized leased lab space and the time required to scale high-throughput automated workflows suggest persistent drag on net margins and a slower path to profitability than implied by the current valuation.
Ginkgo's data
and AI-driven service offerings are being positioned as major future growth catalysts, yet early-stage revenue contribution, unproven willingness of customers to pay for data/models rather than traditional services, and uncertainty in monetization models for proprietary datasets add risk to both revenue and earnings estimates.
Momentum in the sector around AI and lab automation is fueling investor enthusiasm, but this enthusiasm may overlook growing regulatory scrutiny and geopolitical headwinds, especially regarding biosecurity and cross-border biotech deals, creating long-term uncertainty around both revenue growth and cost structure.
Expectations for revenue diversification, particularly from expanding into academic and mid-tier markets with off-the-shelf reagent and CRO services, may be premature, given the need to overcome customer acquisition barriers, competition from established incumbents, and a possible commoditization of core offerings-all factors that could cap long-term revenue and compress margins if not navigated carefully.

Ginkgo Bioworks Holdings Earnings and Revenue Growth

Ginkgo Bioworks Holdings Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Ginkgo Bioworks Holdings's revenue will decrease by 10.2% annually over the next 3 years.
Analysts are not forecasting that Ginkgo Bioworks Holdings will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Ginkgo Bioworks Holdings's profit margin will increase from -136.6% to the average US Life Sciences industry of 14.2% in 3 years.
If Ginkgo Bioworks Holdings's profit margin were to converge on the industry average, you could expect earnings to reach $23.7 million (and earnings per share of $0.38) by about September 2028, up from $-315.2 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 38.5x on those 2028 earnings, up from -2.0x today. This future PE is greater than the current PE for the US Life Sciences industry at 29.1x.
Analysts expect the number of shares outstanding to grow by 4.41% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.54%, as per the Simply Wall St company report.

Ginkgo Bioworks Holdings Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Ginkgo's successful transition from a high-customization R&D solutions provider to a scalable life science tools and automation platform-alongside demonstrated early traction with academic and commercial customers-positions it to capitalize on increasing demand for automation and AI-enabled bioengineering, supporting revenue growth and expanding its total addressable market.
The company's early achievement of $250 million in annual cost savings, coupled with a significant cash position ($474 million) and no bank debt, provides financial flexibility and a strong margin of safety to invest in future growth initiatives, which may enhance earnings and support sustainable profit margin improvement.
Modular automation products and services, like Ginkgo's RAC systems, aim to address industry-wide inefficiencies by enabling scalable, general-purpose laboratory automation. This positions Ginkgo advantageously to benefit from secular trends of lab digitization and falling genomic and automation costs, creating recurring and diversified revenue streams over the long term.
Strategic expansion beyond traditional biotech industry customers, such as entry into the large academic research tools market, suggests increased customer diversification and risk mitigation, potentially leading to a more stable, higher-growth revenue base.
The company's emphasis on accumulating high-value biological datasets and developing AI-powered tools-along with willingness to enable data ecosystem development-could create a sustained competitive moat and unlock future data monetization or licensing revenues, supporting both top-line growth and improved long-term net margins.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $11.333 for Ginkgo Bioworks Holdings based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $16.0, and the most bearish reporting a price target of just $9.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $167.1 million, earnings will come to $23.7 million, and it would be trading on a PE ratio of 38.5x, assuming you use a discount rate of 8.5%.
Given the current share price of $11.33, the analyst price target of $11.33 is 0.0% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

Have other thoughts on Ginkgo Bioworks Holdings?

Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.

Create Narrative

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Cost Reductions And New Partnerships Will Shape Profit Prospects By 2026