On Thursday, Scotiabank adjusted its outlook on Pacific Biosciences (NASDAQ:PACB) of California (NASDAQ:PACB), reducing the price target to $8.00 from the previous $15.00. Despite this change, the firm retained its Sector Outperform rating on the stock.
Pacific Biosciences preannounced its first-quarter results for 2024, which fell short of expectations, leading to a downward revision of the full-year 2024 revenue guidance.
The company cited delays in customer purchases of instrumentation, including 13 forecasted Revio system sales that failed to materialize at the end of the quarter. Additionally, shipments of consumables were not as strong as anticipated, with underperformance noted across all regions.
As a result of these developments, Pacific Biosciences now anticipates its 2024 revenues to decline by approximately 15% or at best remain flat year-over-year. The company is also reassessing when it might reach its long-term revenue target, which was previously set at a minimum of $500 million by 2026.
More details on the company's performance and outlook are expected to be shared during the first-quarter earnings call, scheduled for May 9, 2024, after market close.
In light of the recent preannouncement, Scotiabank has preliminarily updated its 2024 and 2025 revenue projections for Pacific Biosciences. The bank now forecasts that the company will hit the $500 million annualized revenue mark between 2027 and 2028, a delay from the previously anticipated 2026.
Scotiabank believes that Pacific Biosciences has adequate capital to achieve cash flow positivity, which is now projected to occur by 2027, a year later than the initial estimate. Despite the lowered price target and revised expectations, Scotiabank's Sector Outperform rating suggests confidence in the company's long-term prospects.
InvestingPro Insights
In light of Scotiabank's revised outlook for Pacific Biosciences of California, current InvestingPro data provides a deeper financial perspective on the company. With a market cap of $381.19 million and a significant revenue growth of 56.29% in the last twelve months as of Q4 2023, Pacific Biosciences demonstrates a strong expansion in sales. However, the company's operating income margin at -153.07% indicates substantial losses relative to its revenues during the same period.
Two InvestingPro Tips that are particularly relevant to the article's context include the fact that analysts have recently revised their earnings upwards for the upcoming period, which may signal a potential turnaround or at least a slowing down of negative trends. Additionally, the company's liquid assets exceeding short-term obligations suggests a degree of financial stability in the near term, which aligns with Scotiabank's view that Pacific Biosciences has adequate capital to reach cash flow positivity, albeit delayed.
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