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Why Is Pacific Biosciences (PACB) Up 0.2% Since Last Earnings Report?

Zacks Equity Research

A month has gone by since the last earnings report for Pacific Biosciences of California (PACB). Shares have added about 0.2% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Pacific Biosciences due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Pacific Biosciences Beats on Q2 Earnings & Revenues

Pacific Biosciences of California, Inc. incurred second-quarter 2019 adjusted loss of 16 cents per share, narrower than the Zacks Consensus Estimate of a loss of 18 cents. The company had incurred a loss of 17 cents in the year-ago quarter.
 
Revenues totaled $24.6 million, which beat the Zacks Consensus Estimate of $22 million and improved 14.1% from the year-ago quarter’s tally.
 
Segmental Analysis
 
Product Revenue: At this segment, revenues amounted to $21.3 million, up 15% from the prior-year quarter’s tally.
 
Service and Other Revenue: At this segment, revenues came in at $3.4 million, up 9% year over year.
 
Margin Analysis
 
Gross profit in the second quarter of 2019 was $9.6 million, up 8.5% on a year-over-year basis. Gross margin was 39% of total revenues, contracting 210 bps from the year-ago quarter.
 
Research and Development expenses fell 4.8% to $14.9 million in the quarter. Further, sales, general and administrative expenses increased 27.7% to $19.1 million.
 
Operating expenses totaled $33.9 million, up 11.1% year over year.
 
About the Illumina & Pacific Biosciences Merger

Illumina (ILMN) has confirmed its merger with Pacific Biosciences. Per management, the total value of the deal is approximately $1.2 billion. The agreement is expected to close by mid-2019.

For the three months ended June 30, 2019, the company realized around $3.8 million in operating expenses associated with the merger.

How Have Estimates Been Moving Since Then?

Fresh estimates followed an upward path over the past two months.

VGM Scores

At this time, Pacific Biosciences has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Pacific Biosciences has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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