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PacBio's (PACB) Preliminary Q4 Revenues Dampened by Lower Sales

Pacific Biosciences of California, Inc. PACB, popularly known as PacBio, recently announced preliminary revenues for the fourth quarter and full-year 2022. The preliminary results drove down the shares of the company by 0.3% in the after-hours trading session.

The company is expected to release fourth-quarter results in February.

Per the preliminary report, fourth-quarter 2022 worldwide revenues are estimated to be $27.3 million, reflecting a decrease of 24% year over year on a reported basis. This compares to our projection of fourth-quarter revenues of $25.8 million, representing a decline of 28.3%.

The company’s consumable revenues are expected to be approximately $16.6 million in the fourth-quarter, up 10.7% from the prior-year period.

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Preliminary service and other revenue for the fourth quarter of 2022 is expected to be approximately $4.6 million, down 4.2% year over year. This compares to our projection of fourth quarter revenues of $4.4 million, representing a decline of 8.3%.

The preliminary instrument revenue for the fourth quarter of 2022 is expected to be approximately $6.1 million, reflecting a 62.3% fall year over year. The decline was primarily due to the robust demand for Revio displacing previously-anticipated Sequel IIe sales in the fourth quarter. This compares to our projection of fourth-quarter revenues of $8.6 million, representing a decline of 47.1%.

PacBio placed 18 Sequel II/IIe systems during the fourth quarter compared to 48 Sequel II/IIe systems placed in the prior-year period. The Sequel II/IIe installed base was 512 units as of Dec 31, 2022 compared with 374 as of Dec 31, 2021.

During the quarter, the company also introduced the PacBio Compatible program, which has been designed to make the company’s sequencing more accessible. This includes partners across all ends of the sequencing workflow, from automation and sample and library prep to secondary and tertiary analysis tools.

Full-Year Prelim Results

Per PacBio, its full-year worldwide revenues are likely to be $128.2 million, reflecting a decrease of 2% over comparable 2021 figures on a reported basis. The Zacks Consensus Estimate of $129 million lies above the preliminary figure.

This compares to our projection of full-year revenues of $126.8 million, representing a decline of 2.9%.

The consumable revenue for the full year is expected to be $59.9 million. Consumable growth reflected 24% growth in Sequel II and IIe Single Molecule, Real-Time cells shipped in 2022.

This compares to our projection of full-year revenues of $56.1 million, representing an uptick of 7.6%.

A Brief Q4 Analysis

PacBio’s management’s confirmation about receiving robust orders of its newly-launched Revio system (76 out of total orders for 96 instruments) in the fourth quarter looks promising. Per the company, this makes it the most successful product announcement in PacBio’s history, which bodes well for the stock.

PacBio’s other recently-launched product, Onso (an innovative benchtop short-read DNA sequencing system), is also expected to provide superior accuracy by utilizing its proprietary sequencing by binding technology. This, in turn, will likely deliver sensitivity and specificity for novel insights in oncology, disease research and other applications. PacBio commenced its beta program for Onso in the fourth quarter of 2022. This also raises our optimism about the stock.

However, as the company is yet to start shipping its Revio and Onso systems, the decline in PacBio’s fourth-quarter revenues due to the displacement of previously-anticipated Sequel IIe sales raises our apprehensions about the stock.

Price Performance

Shares of the company have gained 40.9% between Oct 1, 2022 and Dec 31, 2022 compared with the industry’s 14.1% rise and the S&P 500’s 6.3% growth.

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Zacks Rank & Key Picks

Currently, PacBio carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. AMN, Cardinal Health, Inc. CAH and Merit Medical Systems, Inc. MMSI.

AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AMN Healthcare has lost 2.9% against the industry’s 4.9% rise between Oct 1, 2022 and Dec 31, 2022.

Cardinal Health, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11.7%. CAH’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average beat being 3%.

Cardinal Health has gained 15.3% compared with the industry’s 12.5% rise between Oct 1, 2022 and Dec 31, 2022.

Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.4%.

Merit Medical has gained 24.9% compared with the industry’s 12.5% rise between Oct 1, 2022 and Dec 31, 2022.

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