Shares of Pacific Biosciences of California Inc. PACB attained a new 52-week high of $12.32 on Dec 20, eventually closing a tad bit lower at $12.20. This represents a strong one-year return of about 58.44%. The S&P 500 decreased almost 3.5% during the same period.
Key Catalysts
Pacific Biosciences expects to gain significant market traction with the recent launch of the PacBio Sequel System. The system was developed as part of its collaboration with Roche. The company expects to start shipping the product in the U.S. from the fourth quarter of 2015.
Pacific Biosciences expected to receive the final development milestone payment of $20 million from Roche in the fourth quarter of 2015. Including this figure, revenues are forecasted to grow in the range of 50% to 55% (up from at least 40%) over $60.6 million reported in 2014.
We believe that Pacific Biosciences has significant growth prospects in plant & animal as well as human genome sequencing. The company’s leading position in microbial sequencing also presents it a significant growth opportunity in the infectious disease market.
New products like the Sequel system and barcode sample prep kits continue to expand the company’s product portfolio. Additionally, development and distribution collaborations will drive market penetration going forward.
Moreover, lower product development cost for the Sequel system will improve the gross margin. However, persistent losses and cash burn are the primary headwinds facing the company at present.
Zacks Rank & Key Picks
Currently, Pacific Biosciences has a Zacks Rank #3 (Hold).
Better-ranked stocks in the same space include Masimo Corp MASI, Natus Medical BABY and Steris Plc STE, all of which sport a Zacks Rank #1 (Strong Buy).
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