3 Reasons to Retain PacBio (PACB) Stock in Your Portfolio
Pacific Biosciences of California, Inc. PACB, 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 first-quarter 2023 performance and its product development activities are expected to contribute further. However, stiff competition and forex woes persist.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 123.3% compared with 8% growth of the industry and a 12.9% rise of the S&P 500.
The renowned global provider of sequencing systems has a market capitalization of $3.04 billion. The company projects 10.9% growth for 2023 and expects to maintain a strong performance. PacBio’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters and broke even in the other two, the average surprise being 3.7%.
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Let’s delve deeper.
Strategic Deals: We are optimistic about PacBio’s robust growth opportunities via its inking of a slew of strategic deals over the past few months. Last month, the company announced that Bioscientia had adopted its Revio long-read sequencing system to enhance the latter’s capabilities in genetic testing and research.
The same month, PacBio announced a clinical research study with Radboud University Medical Center to explore genetic causes of rare and genetic diseases.
Product Development Activities: We are optimistic about PacBio's solid potential in the RNA-sequencing market, which has been fortifying the company’s footprint worldwide. On its first-quarter 2023 earnings call in May, PacBio’s management stated that the demand for its new Revio system continued to be robust, with orders in the first quarter outpacing its shipments of Revio, resulting in a net increase of instrument backlog.
In April, PacBio announced the availability of its new high-throughput Nanobind DNA Extraction kits, another key product from its Circulomics acquisition.
Strong Q1 Results: PacBio saw a robust increase in its overall top line, including strong revenues from Instrument and Consumables in the first quarter of 2023. Solid performances in Asia-Pacific and Europe, the Middle East & Africa regions were also recorded.
Downsides
Forex Instability: The majority of PacBio’s revenues, expenses and capital purchasing activities are transacted in U.S. dollars. Further, a portion of its operations consists of development and sales activities outside the United States, and therefore the company has foreign exchange exposures relating to non-U.S. dollars. A strengthening of the U.S. dollar exchange rate against all currencies in which PacBio operates, after considering offsetting positions, would have resulted in a significant decrease in the carrying amounts of its net assets.
Stiff Competition: PacBio operates in a highly competitive market where 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 positive estimate revision trend for 2023. Over the past 90 days, the Zacks Consensus Estimate for its loss per share has narrowed from $1.24 to $1.23.
The Zacks Consensus Estimate for the company’s second-quarter 2023 revenues is pegged at $40.3 million, suggesting a 13.5% uptick from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Hologic, Inc. HOLX, HealthEquity, Inc. HQY and Boston Scientific Corporation BSX.
Hologic, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 5.1% for fiscal 2024. HOLX’s earnings surpassed estimates in all the trailing four quarters, with an average of 27.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hologic has gained 9.3% compared with the industry’s 8% rise in the past year.
HealthEquity, sporting a Zacks Rank #1 at present, has an estimated long-term growth rate of 22%. HQY’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 9.1%.
HealthEquity has gained 0.5% against the industry’s 18.1% decline over the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11.5%. BSX’s earnings surpassed estimates in two of the trailing four quarters and missed in the other two, the average surprise being 1.9%.
Boston Scientific has gained 39.8% against the industry’s 23.3% decline over the past year.
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HealthEquity, Inc. (HQY) : Free Stock Analysis Report
