On Wednesday, TD Cowen reiterated a Hold rating on 10X Genomics (NASDAQ:TXG), maintaining a $32.00 price target for the company's stock. This announcement comes on the heels of the acquisition of Fluent (NASDAQ:FLNT) BioSciences by Illumina, Inc. (NASDAQ:ILMN). Fluent BioSciences is recognized for its innovative single-cell technology, and the acquisition was made effective today.
The analyst from TD Cowen highlighted that 10X Genomics' stock has experienced significant pressure, declining 66% year-to-date. This is attributed to the growing concerns about the company's growth trajectory for its single-cell business after several quarterly performances fell short of expectations.
Despite the entry of numerous "boxless" competitors into the market over the past two to three years, key opinion leaders (KOLs) have continued to express positive feedback regarding 10X Genomics' single-cell products.
A recent pre-print publication underscored the favorable aspects of the company's single-cell offerings. However, as growth has waned, investor apprehension has intensified. There is optimism that 10X Genomics' newly introduced GEM-X single-cell product, along with enhanced commercial strategies, will catalyze stronger growth due to its higher quality and competitive pricing.
The analyst also noted that, given Fluent's relatively small revenue contribution, the immediate impact of the acquisition on the market is expected to be minimal. Nonetheless, both investors and customers are eager for insights from Illumina regarding its plans to bolster Fluent's product offerings and market presence.
In other recent news, Illumina has completed its acquisition of Fluent BioSciences, a move set to enhance its multiomics capabilities and single-cell analysis technology. The integration of Fluent's PIPseq V technology into Illumina's offerings is expected to make single-cell analysis more accessible.
In addition, Illumina has announced plans to spin off GRAIL, a healthcare company focused on early cancer detection. This decision has led to a reduction in Illumina's price target by Baird to $119, while Evercore ISI has cut its price target to $175, with both firms maintaining their respective ratings on the company's stock.
Following the spin-off, GRAIL is set to debut independently on the Nasdaq stock exchange, focusing its growth strategy on its flagship cancer-detection test, Galleri. Furthermore, Evercore ISI projects a standalone earnings per share (EPS) of over $4.50 for Illumina for the fiscal year 2025.
Meanwhile, Canaccord Genuity has maintained a Hold rating on Illumina's shares, acknowledging the positive step of GRAIL's separation but expressing uncertainty about GRAIL's valuation. These recent developments reflect the evolving landscape of Illumina's business operations.
InvestingPro Insights
As Illumina, Inc. (NASDAQ:ILMN) continues to make strategic moves in the biotechnology industry with its acquisition of Fluent BioSciences and the planned spinoff of GRAIL, it's important to consider the company's financial health and market performance. Illumina's revenue for the last twelve months as of Q1 2024 stands at $4.493 billion, a slight increase of 1.01%, despite a quarterly dip of -1.01%. This indicates a stable revenue stream, albeit with some fluctuations.
InvestingPro Tips suggest that Illumina is expected to see net income growth this year, which may reassure investors looking for signs of profitability following a period of losses. Additionally, with four analysts having revised their earnings upwards for the upcoming period, there is a sentiment of optimism surrounding the company's financial prospects.
However, it's worth noting that Illumina has been operating with a moderate level of debt and has not been profitable over the last twelve months, with an operating income margin of -1.96%. The company's P/E ratio stands at -40.11, reflecting the market's anticipation of future earnings growth rather than current profitability. Moreover, Illumina's trading at a high EBITDA valuation multiple suggests that the market has high expectations for its future earnings before interest, taxes, depreciation, and amortization.
For those interested in exploring these metrics further and discovering additional insights, there are more InvestingPro Tips available at https://www.investing.com/pro/ILMN. To access these tips and take advantage of the full range of features offered by InvestingPro, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.