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Here's Why You Should Retain PacBio (PACB) Stock for Now
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Pacific Biosciences of California, Inc. (PACB - Free Report) , popularly known as PacBio, is well-poised for growth in the coming quarters, courtesy of its slew of strategic deals over the past few months. The optimism, led by a solid third-quarter 2022 performance and strength in its Sequel system, is expected to contribute further. However, stiff competition and production bottlenecks persist.
Over the past year, this Zacks Rank #3 (Hold) stock has lost 53.3% compared with the 23.9% fall of the industry and the 19.8% decline of the S&P 500.
The renowned global provider of sequencing systems has a market capitalization of $1.79 billion. The company projects 3.7% growth for 2023 and expects to maintain a strong performance. PacBio’s projected sales growth of 40% is favorable to the industry’s 13.8%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strategic Deals: We are optimistic about PacBio’s robust growth opportunities via its inking of a slew of deals over the past few months. The company, in December 2022, announced that its HiFi sequencing technology would be used in a pilot project for the Children’s Rare Disease Cohorts Initiative at Boston Children’s Hospital.
In October, PacBio, along with Twist Bioscience Corporation, announced the availability of an initial portfolio of off-the-shelf long-read gene panels — Twist Alliance panels.
Strength in Sequel System: We are optimistic about PacBio's flagship platform, the Sequel system, which has been fortifying the company’s footprint worldwide. The Sequel System has been a significant contributor to Pacific Bioscience’s top line.
During its third-quarter 2022 earnings call in November 2022, PacBio confirmed that it delivered additional Sequel IIes to support multiple customers in their sequencing for a large, population-scale genome project in the United States. The company also shipped multiple Sequel IIes in a competitive deal to a customer in the Middle East planning to launch a population-scale program.
Strong Q3 Results: PacBio’s better-than-expected earnings in third-quarter 2022 buoy optimism. The company saw a robust increase in its Service and other revenues in the quarter. The company also gained from strength in its Consumables revenues during the quarter. Robust performance in the Asia-Pacific region is also encouraging. The company’s slew of launches over the past few months augurs well.
Downsides
Production Bottlenecks: PacBio must successfully manage product introductions and transitions, including the Single Molecule, Real-Time Cell 8M and Sequel II/IIe Systems. However, the company may incur significant costs during these transitions, which may not result in the anticipated benefits.
Stiff Competition: PacBio operates in a highly competitive market, wherein its competitors offer nucleic acid sequencing equipment or consumables. Many of these companies currently have greater resources and may be able to respond more quickly and effectively than PacBio to new or changing opportunities, technologies, standards or customer requirements.
Estimate Trend
PacBio has been witnessing a negative estimate revision trend for 2023. Over the past 30 days, the Zacks Consensus Estimate for its loss per share has widened from $1.36 to $1.37.
The Zacks Consensus Estimate for the company’s fourth-quarter 2022 revenues is pegged at $26.4 million, suggesting a 26.8% decline from the year-ago quarter’s reported number.
This compares to our fourth-quarter revenue estimate of $25.8 million, suggesting a 28.3% fall from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Boston Scientific Corporation (BSX - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) .
AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%.
AMN Healthcare has lost 10.6% compared with the industry’s 30.3% decline in the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.3%. BSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 1.9%.
Boston Scientific has gained 6.9% against the industry’s 42.6% decline over the past year.
Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.4%.
Merit Medical has gained 13.7% against the industry’s 8.7% decline over the past year.
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Here's Why You Should Retain PacBio (PACB) Stock for Now
Pacific Biosciences of California, Inc. (PACB - Free Report) , popularly known as PacBio, is well-poised for growth in the coming quarters, courtesy of its slew of strategic deals over the past few months. The optimism, led by a solid third-quarter 2022 performance and strength in its Sequel system, is expected to contribute further. However, stiff competition and production bottlenecks persist.
Over the past year, this Zacks Rank #3 (Hold) stock has lost 53.3% compared with the 23.9% fall of the industry and the 19.8% decline of the S&P 500.
The renowned global provider of sequencing systems has a market capitalization of $1.79 billion. The company projects 3.7% growth for 2023 and expects to maintain a strong performance. PacBio’s projected sales growth of 40% is favorable to the industry’s 13.8%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strategic Deals: We are optimistic about PacBio’s robust growth opportunities via its inking of a slew of deals over the past few months. The company, in December 2022, announced that its HiFi sequencing technology would be used in a pilot project for the Children’s Rare Disease Cohorts Initiative at Boston Children’s Hospital.
In October, PacBio, along with Twist Bioscience Corporation, announced the availability of an initial portfolio of off-the-shelf long-read gene panels — Twist Alliance panels.
Strength in Sequel System: We are optimistic about PacBio's flagship platform, the Sequel system, which has been fortifying the company’s footprint worldwide. The Sequel System has been a significant contributor to Pacific Bioscience’s top line.
During its third-quarter 2022 earnings call in November 2022, PacBio confirmed that it delivered additional Sequel IIes to support multiple customers in their sequencing for a large, population-scale genome project in the United States. The company also shipped multiple Sequel IIes in a competitive deal to a customer in the Middle East planning to launch a population-scale program.
Strong Q3 Results: PacBio’s better-than-expected earnings in third-quarter 2022 buoy optimism. The company saw a robust increase in its Service and other revenues in the quarter. The company also gained from strength in its Consumables revenues during the quarter. Robust performance in the Asia-Pacific region is also encouraging. The company’s slew of launches over the past few months augurs well.
Downsides
Production Bottlenecks: PacBio must successfully manage product introductions and transitions, including the Single Molecule, Real-Time Cell 8M and Sequel II/IIe Systems. However, the company may incur significant costs during these transitions, which may not result in the anticipated benefits.
Stiff Competition: PacBio operates in a highly competitive market, wherein its competitors offer nucleic acid sequencing equipment or consumables. Many of these companies currently have greater resources and may be able to respond more quickly and effectively than PacBio to new or changing opportunities, technologies, standards or customer requirements.
Estimate Trend
PacBio has been witnessing a negative estimate revision trend for 2023. Over the past 30 days, the Zacks Consensus Estimate for its loss per share has widened from $1.36 to $1.37.
The Zacks Consensus Estimate for the company’s fourth-quarter 2022 revenues is pegged at $26.4 million, suggesting a 26.8% decline from the year-ago quarter’s reported number.
This compares to our fourth-quarter revenue estimate of $25.8 million, suggesting a 28.3% fall from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Boston Scientific Corporation (BSX - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) .
AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare has lost 10.6% compared with the industry’s 30.3% decline in the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.3%. BSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 1.9%.
Boston Scientific has gained 6.9% against the industry’s 42.6% decline over the past year.
Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.4%.
Merit Medical has gained 13.7% against the industry’s 8.7% decline over the past year.