TD Cowen has nominated Twist Bioscience as its top small- to mid-cap equity idea, arguing the company is well positioned at the junction of a revitalized base business and accelerating demand tied to AI-enabled drug discovery and wet lab services.
The firm emphasizes two aspects it believes the market has not fully priced: the strength within Twists operating segments and the potential for improved margins as the business scales. TD Cowen describes a constructive outlook for TWST shares, noting the firms view that the company is approaching profitability even while maintaining conservative guidance.
Platform and demand dynamics
Twist Biosciences silicon-based DNA synthesis platform is cited as a structural advantage, delivering low-cost, high-throughput DNA that supports both the companys next-generation sequencing (NGS) products and its DNA synthesis segment. TD Cowen states that NGS revenues account for more than half of the companys total sales, and that early signals point to sharply rising order volumes driven by AI-related workflows.
The research house reports that conversations with biotechnology and pharmaceutical R&D teams indicate the year-to-date increase in AI-driven orders is likely only the opening phase of a sustained tailwind for wet lab services. TD Cowen frames AI demand as a multi-year driver rather than a single-period spike.
Financial and operational levers
Operational capacity and cost structure are presented as the principal levers for margin expansion. TD Cowen highlights Twists Factory of the Future, which has the ability to support more than $1 billion in annual revenue - a capacity the firm notes is over twice the companys current output. That excess capacity, combined with managements emphasis on cost efficiency, is viewed as providing a clear route to higher gross margins.
As revenues increase, TD Cowen anticipates that the company can reach adjusted EBITDA breakeven in the fourth fiscal quarter as margin improvements outpace incremental operating expense, given the current scale and factory headroom.
Product mix and medium-term growth
The NGS business is expected by TD Cowen to represent a majority of revenues in fiscal year 2026. The firm additionally calls out the expansion of minimal residual disease testing as an underappreciated medium- and longer-term growth driver for the NGS segment.
Recent results and analyst activity
In a recent company update, Twist Bioscience reported second-quarter revenues of $111 million, a result that exceeded consensus estimates. Following the update, several analyst actions occurred: Canaccord Genuity and Piper Sandler initiated coverage of the company, while TD Cowen and Leerink raised their price targets.
TD Cowens combination of demand commentary, capacity metrics and a near-term path to adjusted EBITDA breakeven underpins its designation of Twist Bioscience as its top small- to mid-cap idea.
Note: This article presents the facts and analyst views reported by TD Cowen regarding Twist Bioscience without additional commentary or independent forecasts.