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3 Gene Sequencing Stocks With Potential to Gain in 2H22

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The first half of 2022 was marred by a decline in stocks across all industries with the rise in inflation driving the cost of production as well as the cost of funds needed for operations following Fed rate hikes. The decline in U.S. markets was also reflected in markets across the globe amid increasing risks of a recession.

Moreover, coronavirus cases rose again as subvariants of Omicron spread to different countries. In the past week, daily COVID-19 cases have averaged more than 134,000 cases in the United States. However, death rates have been lower compared to the previous two years. Apart from the United States, COVID-19 cases have risen in many countries including India and China. There have also been several regional lockdowns in China in a bid to contain the spread of the virus following initial infection cases. The lockdowns increased supply-chain disruptions, driving costs higher.

However, the pandemic opened doors for scientific opportunities that presented several new capacities for a response to this crisis. While the development of vaccines at a tremendously rapid speed is one such feat, genomic sequencing is another significant one.

When it came to managing the outbreak, sequencing came to the rescue as it helped to rapidly detect SARS-CoV-2 and develop diagnostic tests as well as other tools. In fact, consistent genome sequencing has been aiding in monitoring the disease’s spread and evolution of the virus. As new variants continue to form, genomic data has helped countries make informed public health decisions quickly.

With multiple subvariants of Omicron doing the rounds, the need for genome sequencing is likely to rise, creating an alluring investment prospect amid the pandemic-induced challenges. Moreover, the launch of new test kits for other diseases will support the growth of these companies going forward. Considering these, stocks like PerkinElmer (PKI - Free Report) , Thermo Fisher Scientific (TMO - Free Report) and 10x Genomics (TXG - Free Report) show promise, backed by their solid growth potential.

Gene Sequencing Prospects Bright

By now, it is quite understandable that the utilization of genome sequencing can be consolidated and further extended to new settings and uses. Advanced integration of genome sequencing into the practices of the global health community is imperative in order to be better prepared for future threats.

The absence of sequencing will make public health authorities unaware of the viral mutations that can lower the efficacy of current response tools like tests and vaccines to name a few. Apart from making informed public health action, sequencing can help in conducting more efficient case investigations like tracing viral lineage, transmission and the rate of evolution.

Additionally, genome sequencing can create a way of gauging the real-time effectiveness of the public health response and making adjustments accordingly. In the face of new strains, sequencing has provided information that enabled the quick development of vaccine boosters effective against variants.

The U.S. government has spent several billions of dollars to support genomic sequencing and surveillance initiatives as well as to bolster laboratory testing in a bid to boost COVID-19 mitigation activities. Given the rising infection cases, the government may again initiate funding for genomic sequencing and laboratory testing.

3 Gene Sequencing Stocks in Focus

Here are three genome sequencing stocks that investors might be interested in the second half of 2022, given their efforts to significantly enhance sequencing and ultimately ensure public health safety.

The first one is PerkinElmer, which currently carries a Zacks Rank #3 (Hold). Last year, the company launched the research-use only NEXTFLEX Variant-Seq SARS-CoV-2 Kit v2, with the aim of accelerating the detection of SARS-CoV-2 variants. This complete next-generation sequencing (NGS) solution will likely allow laboratories to boost sequencing throughput and make reliable variant identifications. The NEXTFLEX Variant-Seq SARS-CoV-2 Kit v2 will be using positive SARS-CoV-2 samples to detect mutations associated with all SARS-CoV-2 variants, including Omicron. PerkinElmer beat earnings estimates in each of the trailing four quarters, with the average being 22.06%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

PerkinElmer’s long-term earnings growth rate is estimated at 46.5%. The company’s earnings yield of 5.08% compares favorably with the industry’s 3.53%.

The second one is Thermo Fisher that presently carries a Zacks Rank of 3. Recently, the company received FDA clearance for EliA RNA Polymerase III and EliA Rib-P blood tests intended to diagnose systemic sclerosis and systemic lupus erythematosus. With the addition of these tests, the EliA portfolio will deliver a more robust clinical offering through a wide-ranging menu of automated connective tissue disease tests. The company also continues to play a very meaningful role in terms of COVID-19 testing, vaccines and therapy-related advancement. Thermo Fisher beat earnings estimates in each of the trailing four quarters, with the average being 16.94%.

Thermo Fisher’s long-term earnings growth rate is estimated at 13%. The company’s earnings yield of 4.07% compares favorably with the industry’s (8.09%).

The final one is 10x Genomics, a Zacks Rank #3 company, which builds products to interrogate, understand and master biology to advance human health. Its integrated solutions include instruments, consumables, and software for analyzing biological systems at a resolution and scale that match the complexity of biology. With the company’s ability to measure gene expression proteins, epigenetic programming in new features and other modalities, customers currently have access to a comprehensive toolkit for interrogating biology of the right resolution and scale. Linked-Reads — a sequencing technology built by 10x Genomics — leverages microfluidics to partition and barcode HMW DNA for generating a data type that offers contextual information about the genome from short reads. This technology helps to consolidate multiple assays into a single, powerful workflow with low input requirements.

The Zacks Consensus Estimate for full-year 2022 revenues is pegged at $611.42 million, suggesting an improvement of 24.65% from the previous year. The company’s earnings yield of (1.93%) compares favorably with the industry’s (13.95%).


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