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Here's Why You Should Retain Pacific Biosciences For Now
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Pacific Biosciences of California, Inc. (PACB - Free Report) continues to benefit from innovative product portfolio, Sequel system – Pacific Biosciences’ flagship platform and promising Asian markets. However, contraction in gross margin remains a concern.
The stock carries a Zacks Rank of 3 (Hold).
Price Performance
Shares of Pacific Biosciences have gained 11.9% in a year’s time, against the industry’s decline of 4.8%. Meanwhile, the S&P 500 Index rallied 2.3% in the same time period.
What’s Deterring the Stock?
Pacific Biosciences has been witnessing contraction in gross margin over a considerable period of time. In the second quarter of 2019, gross margin was 39% of total revenues, contracting 210 bps from the year-ago quarter. Moreover, operating expenses totaled $33.9 million, which improved 11.1% year over year.
What’s Favoring the Stock?
Pacific Biosciences continues to benefit from innovative product portfolio that has been boosting its performance for quite some time now. Moreover, new developments in products instill optimism in the stock.
With respect to such developments, the company has obtained average sequencing read links approaching 100 kilobases sequencing yield for SMRT cell exceeding 40 gigabases. These substantial developments open up new opportunities for SMRT Sequencing and are likely to expand the company’s product spectrum.
Pacific Biosciences’ flagship platform — the Sequel system — has been strengthening its presence global. Sequel system is a nucleic acid sequencing platform based on SMRT technology. The Sequel System has been a significant contributor to Pacific Bioscience’s top line.
In the recent past, the company unveiled the upgraded Sequel System and new multiplexing tools at the American Society for Microbiology to make the process of obtaining microbial genomes accurate, faster and more affordable. We expect the Sequel system’s higher throughput, scalability, lower upfront capital investment, and smaller size and weight will attract cost-sensitive customers.
Pacific Biosciences continues to see solid demand for SMRT sequencing in Asia. The company also witnesses significant strength in its China business. Moreover, Novogene has become Pacific Biosciences’ largest customer worldwide. The facility is located in Nanjing China and houses 20 sequel systems.
Which Way Are Estimates Headed?
For 2019, the Zacks Consensus Estimate for revenues is pegged at $99.9 million, indicating an improvement of 27.1% from the year-ago period. The same for earnings stands at a loss of 64 cents per share.
Baxter has a long-term earnings growth rate of 12.8%.
Amedisys has a long-term earnings growth rate of 16.3%.
CONMED has a long-term earnings growth rate 14.9%.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.
Image: Bigstock
Here's Why You Should Retain Pacific Biosciences For Now
Pacific Biosciences of California, Inc. (PACB - Free Report) continues to benefit from innovative product portfolio, Sequel system – Pacific Biosciences’ flagship platform and promising Asian markets. However, contraction in gross margin remains a concern.
The stock carries a Zacks Rank of 3 (Hold).
Price Performance
Shares of Pacific Biosciences have gained 11.9% in a year’s time, against the industry’s decline of 4.8%. Meanwhile, the S&P 500 Index rallied 2.3% in the same time period.
What’s Deterring the Stock?
Pacific Biosciences has been witnessing contraction in gross margin over a considerable period of time. In the second quarter of 2019, gross margin was 39% of total revenues, contracting 210 bps from the year-ago quarter.
Moreover, operating expenses totaled $33.9 million, which improved 11.1% year over year.
What’s Favoring the Stock?
Pacific Biosciences continues to benefit from innovative product portfolio that has been boosting its performance for quite some time now. Moreover, new developments in products instill optimism in the stock.
With respect to such developments, the company has obtained average sequencing read links approaching 100 kilobases sequencing yield for SMRT cell exceeding 40 gigabases. These substantial developments open up new opportunities for SMRT Sequencing and are likely to expand the company’s product spectrum.
Pacific Biosciences’ flagship platform — the Sequel system — has been strengthening its presence global. Sequel system is a nucleic acid sequencing platform based on SMRT technology. The Sequel System has been a significant contributor to Pacific Bioscience’s top line.
In the recent past, the company unveiled the upgraded Sequel System and new multiplexing tools at the American Society for Microbiology to make the process of obtaining microbial genomes accurate, faster and more affordable. We expect the Sequel system’s higher throughput, scalability, lower upfront capital investment, and smaller size and weight will attract cost-sensitive customers.
Pacific Biosciences continues to see solid demand for SMRT sequencing in Asia. The company also witnesses significant strength in its China business. Moreover, Novogene has become Pacific Biosciences’ largest customer worldwide. The facility is located in Nanjing China and houses 20 sequel systems.
Which Way Are Estimates Headed?
For 2019, the Zacks Consensus Estimate for revenues is pegged at $99.9 million, indicating an improvement of 27.1% from the year-ago period. The same for earnings stands at a loss of 64 cents per share.
Key Picks
Some better-ranked stocks from the broader medical space are Baxter International Inc. (BAX - Free Report) , Amedisys, Inc. (AMED - Free Report) and CONMED Corporation (CNMD - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Baxter has a long-term earnings growth rate of 12.8%.
Amedisys has a long-term earnings growth rate of 16.3%.
CONMED has a long-term earnings growth rate 14.9%.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.
See 7 breakthrough stocks now>>