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Ginkgo (DNA) to Report Q3 Earnings: What's in the Cards?

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We expect investors to focus on Ginkgo Bioworks Holdings, Inc.’s (DNA - Free Report) sales performance of its two business units when it reports third-quarter 2022 results.

DNA’s surprise record has been dismal so far, as its earnings surpassed expectations in one of the trailing four quarters and missed on the remaining three occasions. It has a trailing four-quarter negative earnings surprise of 185.00% on average. In the last reported quarter, Ginkgo delivered a negative earnings surprise of 720.00%.

Shares of Ginkgo have plunged 69.9% this year compared with the industry’s decline of 21.5%.

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Let’s see how things have shaped up for the quarter to be reported.

Factors at Play

Ginkgo’s revenues in the third quarter are likely to have been driven by the company’s two business segments, namely Foundry and Biosecurity. Total revenues increased significantly in the last reported quarter, a trend that is likely to have continued in the to-be-reported quarter.

Foundry revenues in the last reported quarter increased significantly year over year, a trend likely to have continued in the to-be-reported quarter as well. DNA added 13 new cell programs in the last reported quarter, representing year-over-year growth of 86%. We expect this trend to have continued in the third quarter.

Biosecurity revenues, too, increased significantly year over year in the last reported quarter, a trend that is likely to have continued in the third quarter as well.

In July 2022, Ginkgo inked an agreement to acquire Zymergen in an all-stock transaction. This is likely to have diversified Ginkgo’s customer base and enabled new growth opportunities across many end markets.

The activities related to the development of its business are likely to have escalated DNA’s operating expenses in the third quarter.

Recent Developments

In July 2022, Ginkgo entered into an agreement to acquire Bayer's (BAYRY - Free Report) West Sacramento agricultural biologicals R&D facility. Ginkgo and Bayer closed the deal last month.

The deal, which represents Ginkgo's largest-ever cell programming contract, is likely to earn royalties on net sales from products developed under the partnership with BAYRY.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Ginkgo this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here, as you will see below. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Earnings ESP: Ginkgo's Earnings ESP is 0.00% as the Most Accurate Estimate and the Zacks Consensus Estimate currently are both pegged at a loss of 16 cents per share.

Zacks Rank: Ginkgo currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Emergent BioSolutions Inc. (EBS - Free Report) has an Earnings ESP of +45.46% and a Zacks Rank #3.

Emergent’s stock has declined 54.1% so far this year. EBS topped earnings estimates in one of the last four quarters and missed on three occasions. EBS has a four-quarter negative earnings surprise of 90.89% on average.

Beam Therapeutics Inc. (BEAM - Free Report) has an Earnings ESP of +14.90% and a Zacks Rank #3.

Beam Therapeutics’ stock has lost 46.3% so far this year. BEAM topped earnings estimates in all the last four quarters. BEAM has a four-quarter earnings surprise of 19.14% on average.

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