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Does 10x Genomics (TXG) Have a Strong Growth Opportunity Ahead?

Soumya Eswaran
·3 min read

Brown Capital Management, an investment management company, released its “The Brown Capital Management Small Company Fund” first quarter 2024 investor letter. A copy of the letter can be downloaded here. The Small Company Fund returned 0.48%, significantly underperforming the Russell 2000 Growth index’s 7.58% return. Following the release of the inflation report in February, the Small Company Fund experienced underperformance as investors shifted away from high-growth companies, impacting their valuations. In addition, check the fund’s top five holdings to know its best picks in 2024.

The Brown Capital Management Small Company Fund highlighted stocks like 10x Genomics, Inc. (NASDAQ:TXG), in the first quarter 2024 investor letter. 10x Genomics, Inc. (NASDAQ:TXG) is a life science technology company. The one-month return of 10x Genomics, Inc. (NASDAQ:TXG) was -12.42%, and its shares lost 63.59% of their value over the last 52 weeks. On June 24, 2024, 10x Genomics, Inc. (NASDAQ:TXG) stock closed at $19.88 per share with a market capitalization of $2.38 billion.

The Brown Capital Management Small Company Fund stated the following regarding 10x Genomics, Inc. (NASDAQ:TXG) in its first quarter 2024 investor letter:

"10x Genomics, Inc. (NASDAQ:TXG) is a leading life-science technology company developing and selling instruments, consumables and software for analyzing gene expression in cells. Gene expression controls the functioning of a cell and is fundamental to developing biological insights and advancing human health. 10x tools comprise three platforms: the original Chromium platform for analyzing loose single cells, which contributes the bulk of company revenue; the Visium platform for spatial analysis of tissue sample; and the recently released Xenium platform for subcellular spatial mapping. They are differentiated by their resolution, efficiency, accuracy, throughput, repeatability and simplicity. The tools are advancing academic research, particularly in the areas of oncology, immunology and neuroscience.

10x Genomics reported mixed fourth quarter results in mid-February, with revenue above expectations, but earnings falling short. However, as noted above, management’s revenue guidance of 8-12% growth for 2024 was a meaningful deceleration from 20% in 2023. Over the past 12-18 months, 10x Genomics has cemented itself as the leader of not only single-cell analysis, with its original Chromium platform, but also in spatial analysis. The company had successful launches of its Visium instrument in late 2022 and its new Xenium platform in early 2023. In addition, 10x Genomics defended its intellectual property in 2023, resulting in Nanostring, 10x’s main spatial competitor, filing for bankruptcy in February 2024. 10x Genomics is in a strong position to push the boundaries of life sciences and capitalize on research spending. We remain confident 10x Genomics has a strong opportunity for growth ahead."

A team of medical professionals in surgical scrubs analysing research data in a laboratory.

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10x Genomics, Inc. (NASDAQ:TXG) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 33 hedge fund portfolios held 10x Genomics, Inc. (NASDAQ:TXG) at the end of the first quarter which was 30 in the previous quarter. In the first quarter, 10x Genomics, Inc.'s (NASDAQ:TXG) total revenue increased by 5% to reach $141 million. While we acknowledge the potential of 10x Genomics, Inc. (NASDAQ:TXG) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

We discussed 10x Genomics, Inc. (NASDAQ:TXG) in another article and shared the list of oversold midcap stocks to buy. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.

READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.

Disclosure: None. This article is originally published at Insider Monkey.