On Wednesday, Canaccord Genuity adjusted its outlook on Pacific Biosciences (NASDAQ:PACB) of California (NASDAQ:PACB), reducing the price target on the company's shares to $3.50 from the previous $10.00, while maintaining a Buy rating.
The revision follows Pacific Biosciences' announcement of preliminary first-quarter 2024 results that fell short of expectations, leading to a reduction in the company's revenue guidance for the year and beyond.
Pacific Biosciences reported its first-quarter results before the market opened on Tuesday, April 16, revealing figures significantly below analyst estimates and the FactSet consensus. The disappointing performance was attributed to lower-than-anticipated instrument placements, despite ending the quarter with a backlog, and reduced consumables utilization, which is expected to improve throughout the year.
The financial firm acknowledged the challenges faced by Pacific Biosciences, particularly concerning the demand for its Revio product and the company's ability to secure sufficient orders to meet its revised annual guidance. The uncertainty surrounding the duration of these headwinds has prompted questions about the ongoing demand for the company's offerings.
In light of these developments, Canaccord Genuity has substantially lowered its revenue projections for Pacific Biosciences, utilizing a 10-year discounted cash flow (DCF) model. This recalibration has resulted in a significant decrease in the price target.
Despite the reduced target, the shares are seen as having the potential to offer over 100% return to the revised target, although the firm notes that expectations for near-term valuation expansion may be overly optimistic considering recent events.
InvestingPro Insights
Following Canaccord Genuity's revised outlook on Pacific Biosciences of California, InvestingPro data provides additional context into the company's financial health and market position. Pacific Biosciences currently holds a market capitalization of $381.19 million, with a significant revenue growth reported in the last twelve months as of Q4 2023, at 56.29%.
Despite this growth, the company's operating income margin was deeply negative at -153.07%, reflecting the challenges in translating revenue into profitability.
InvestingPro Tips suggest that analysts are cautious about Pacific Biosciences' short-term profitability, with revisions indicating no expectations for profits this year, and the company's stock price experiencing notable volatility.
Moreover, the company's liquid assets surpass its short-term obligations, which could be a cushion against financial strain. With the stock trading near its 52-week low and a history of not paying dividends, investors are likely considering both the risks and potential for recovery.
For those looking to delve deeper into Pacific Biosciences' prospects, InvestingPro offers additional insights and tips. There are 5 more InvestingPro Tips available that could further guide investment decisions. To access these tips and comprehensive analyses, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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