We expect investors to focus on the sales performance of Ginkgo Bioworks Holdings, Inc.’s (DNA Quick QuoteDNA - Free Report) two business units when the company reports third-quarter 2023 results on Nov 8 after market close.

Ginkgo's earnings surprise record has been mixed so far, as it surpassed expectations in two of the trailing four quarters, met the same once and missed on the other occasion. It has a trailing four-quarter earnings surprise of 9.45% on average. In the last reported quarter, DNA delivered in-line earnings.

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

Factors at Play

Ginkgo’s revenues comprise sales from its two business segments namely — Biosecurity and Cell Engineering.

Total revenues are likely to have witnessed a decline in the to-be-reported quarter, owing to the expected ramp-down of the company’s K-12 COVID testing services.

Cell Engineering services revenues grew 2% in the last reported quarter. However, excluding the impact of downstream value share, cell engineering revenues surged 72% year over year.

The company added 21 new cell programs, representing a 44% increase year over year. It is likely to have added a sizable number of programs in the to-be-reported quarter as well.

Shares of Ginkgo have lost 3% so far this year compared with the industry’s decline of 21%.

Image Source: Zacks Investment Research

Meanwhile, biosecurity business revenues were hurt by the expected ramp-down of K-12 COVID testing services. With the pandemic almost coming to an end, we expect this trend to have continued in the to-be-reported quarter. This segment is seeing a mix shift toward emerging product lines that are more recurring in nature, such as federal and international partnerships supporting pathogen monitoring and biosecurity infrastructure development. It remains to be seen if this shift improved the segment’s revenues in the third quarter.

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

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 are both pegged at a loss of 9 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

Here are a few stocks worth considering from the healthcare space, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.

Ligand Pharmaceuticals Incorporated has an Earnings ESP of +2.94% and a Zacks Rank #1.

Ligand’s stock has lost 19.2% in the year-to-date period. LGND beat earnings estimates in three of the last four quarters while missing the mark on the other occasion. Ligand delivered an earnings surprise of 52.47%, on average. Ligand will report its third-quarter results on Nov 8.

bluebird bio, Inc. (BLUE Quick QuoteBLUE - Free Report) has an Earnings ESP of +12.73% and a Zacks Rank #3.

bluebird bio’s stock has declined 49.7% in the year-to-date period. BLUE beat earnings estimates in each of the last four quarters. The company delivered an earnings surprise of 89.60%, on average. BLUE will report its third-quarter results on Nov 7.

Mirati Therapeutics, Inc. has an Earnings ESP of +0.76% and a Zacks Rank #3.

Mirati’s stock has surged 23.6% in the year-to-date period. MRTX beat earnings estimates in each of the trailing last four quarters. MRTX delivered an earnings surprise of 7.77%, on average.