Pacific Biosciences of California (PACB) PT Lowered to $7 at Scotiabank

Scotiabank analyst Sung Ji Nam lowered the price target on Pacific Biosciences of California (NASDAQ: PACB) to $7.00 (from $8.00) while maintaining a Sector Outperform rating.

The analyst commented: "We are adjusting our 2024 and 2025 revenue estimates and assume a more gradual recovery from end market capital spending constraints. PACB continues to target cash flow positivity by the end of 2026, and we are awaiting an update to PACB’s other long-term financial targets (timing unknown). Many of the LST companies have cited capital spending constraints by their customers (both biopharma and academia) in recent quarters and also many lowered FY24 revenue guidance (Exhibit #). While we are more cautious about PACB’s near-term growth trajectory, we continue to think there is significant potential for HiFi sequencing when the end market conditions improve. Specifically, we are encouraged by some of the positive trends for Revio, including >2x long-read sequencing data generation y/y in 2Q24, new to PACB adoptions, increasing adoption in the clinical setting, relatively stable Revio ASP, solid consumables growth, traction with leasing promotions, adoption rate of new applications (Kinnex) and near-term pipeline progress (new Revio consumable upgrade; benchtop long-read sequencer). Additionally, as previously announced, PACB is on track to exit 2024 with >$75mm annualized run rate cost savings."

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