Summary
Amyris is still a strong biotech pick despite the massive price decline.
The company reported very weak Q3 earnings and a capital raise. This helped tank the price of Amyris shares considerably over the past month.
I believe in the product portfolio and the company’s vision long term.
Risks to the future of synthetic biology and Amyris product line is minimal.
Valuation remains strong relative to peers.
Guido Mieth/DigitalVision via Getty Images Background
Amyris ( AMRS ) is one of the future leaders in the synthetic biology industry. The company has been innovating with their pipeline of products, furthering their mission of environmentally sustainable growth investing. Ever since the disastrous Q3 results Amyris has been very range bound within the 4-6 dollar range. In 2022, Amyris has a great opportunity to benefit from potential biotech tailwinds. I will also be looking at Amyris’ financial situation and earnings growth. The Horrendous Q3 and Potential Bright Spots of the Report
After Amyris released their Q3 2021 earnings report, there was a very visceral reaction to the stock. On November 9th 2021, Amyris shares fell roughly 50% in one day. This was due to the company announcing top and bottom line disappointments. The company subsequently announced a 500 million dollar capital raise with a 1.5% interest rate. This was quite the fall from grace for a stock that had been doubling YoY. The price shock rattled investors and Amyris stock has been range bound since. However, I do believe there were beneficial pieces of information in the company’s Q3 2021 earnings report. Source: ( Amyris Q3 2021 Earnings Presentation )
The bottom line is that Amyris did not report the worst numbers in the world. The company has been expanding operations finally has decent profit margins for many of their products. This will enable Amyris to grow into its multi-billion dollar valuation and beat investor expectations. Even though their profitability timeline was pushed back I still believe in Amyris’ ability generate revenue in the short to medium term. Source: (Amyris Q3 2021 Earnings Presentation)
Amyris has a multiyear growth strategy that can’t be shaken by one poor quarter. The record revenue growth should not be taken lightly as Amyris’ products have outperformed commercially. Currently consumer revenue is up 89% YoY which may even expand moving forward with future products. I believe in Amyris’ ability to compound their technological advantage to fuel earnings and share price growth. Source: (Amyris Q3 2021 Earnings Presentation)
Even after Amyris’ capital raise their liquidity plan is strong. The company has been actively cutting legacy debt and lowering their overall debt exposure. Management’s decision to raise capital at 1.5% is not a bad long term investment. At today’s interest rates it would be very smart for a growing biotech company to raise capital to pay down higher interest rate debt. Overall, I believe in the future financial strength of Amyris through their core product line and increasing gross margins. Consumer Brands and Partnerships are Driving Growth
Partnerships and brand relations will be very important to Amyris’ success moving forward. Amyris’ produces chemical substitutes for compounds only found in animals. The beauty industry has been notorious over the past couple year for abusing animals to create their products. Amyris fixes this problem for many large beauty conglomerates. This will also help investor relations as exposure to Amyris will raise a company’s ESG score. Even though ESG may be a buzzword there is significant money flowing into the sector. Amyris has great potential to be the first mover in a growing industry. Source: (Amyris Q3 2021 Earnings Presentation)
The lab to market pipeline has shown immense value over the past 12 months. Amyris continues to expand their Pipette and Biossance brands internationally. Amyris’ commercial and industrial revenue streams have the potential to create positive earnings momentum for the stock. As consumers increasingly become environmentally conscious both brands could see exponential increases in valuation over the next couple of years. Source: (Amyris Q3 2021 Earnings Presentation)
Growing the portfolio will be key to Amyris’ continued success. Amyris has been quietly completing numerous acquisitions with sustainable beauty brands across the world. Most notably expanding into Latin America with Costa Brazil and furthering their commercial business with an AI beauty application company Beauty Labs. I like the variety of businesses Amyris is investing in and believe they will have great synergies moving forward.
Scale is going to be critical for Amyris moving forward. The company needs to leverage the synergies within their consumer brands and clinical portfolio to […]
source Amyris: Enabling Environmentally Sustainable Beauty Products
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