Pacific Biosciences of California, Inc. (PACB – Free Report) , popularly known as PacBio, has been gaining from its continued product development. The optimism, led by decent fourth-quarter results, is expected to contribute further. However, long purchasing cycles and macroeconomic concerns persist.
In the past six months, this Zacks Rank #3 (Hold) company’s shares have lost 28.1% compared with 9.7% decline of the industry. The S&P 500 Composite has also declined 1.6% in the said time frame.
The renowned global provider of sequencing systems has a market capitalization of $363.4 million. The company projects 15.7% growth for 2025 and expects to maintain its strong performance going forward. PacBio’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters and met twice, delivering an average surprise of 7.9%.
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Factors Favouring PACB’s Growth
Sequencing Technologies Strengthen Market Leadership:PacBio differentiates itself in the genomics industry through its proprietary HiFi long-read sequencing, based on Single-Molecule Real-Time (SMRT) technology, which enables the high-accuracy, real-time detection of complex genomic structures, such as structural variations, haplotypes, and epigenetic modifications.
The global SMRT market, valued at $2.74 billion in 2023, is projected to reach $4.14 billion by 2031, witnessing a CAGR of 5.3%. Additionally, PacBio has expanded its offerings by integrating Sequencing by Binding chemistry with the launch of its Onso system in 2022, a short-read platform delivering ≥90% of bases at Q40+ accuracy—15 times more precise than traditional sequencing methods. By providing both long-read and short-read technologies, PacBio uniquely serves diverse research and clinical applications while driving down costs and enhancing variant detection.
Robust Product Portfolio Driving Growth: PacBio’s diverse and expanding product portfolio is driving strong adoption across research, clinical, and population genomics markets. The flagship Revio system remains the primary growth driver, with nearly 200 units installed and enhanced by its high-throughput capabilities and SPRQ chemistry upgrade, making it ideal for large-scale projects.
The launch of the lower-cost Vega benchtop platform has further expanded PacBio’s market reach, with early adoption seen in customers such as Berry Genomics, which has committed to 50 units for clinical applications. Additionally, consumables revenue grew 11% year over year to $70.4 million, reflecting increased utilization, while investments in bioinformatics solutions and participation in large-scale genomics projects like Estonia Biobank and Dubai’s program continue to fuel growth.
Decent Q4 Results: PacBio exited the fourth quarter of 2024 with in-line loss per share and better-than-expected revenues. A robust increase in its Service and other revenues was encouraging. The expansion of the adjusted gross margin also bodes well.
During the quarter, the company commenced shipment of SPRQ chemistry. On the earnings call, management confirmed that PACB has been witnessing continued expansion of its customer base and the adoption of PacBio HiFi long-read sequencing. These look promising for the stock.
Factors That May Offset the Gains for PACB
Longer Purchasing Cycles: PacBio is facing longer sales cycles for its high-cost Revio sequencing system as customers navigate funding uncertainties and tighter capital budgets. The company has reported that academic and government-backed institutions, particularly in the United States, are delaying purchasing decisions due to budget freezes and funding constraints at the National Institutes of Health. Additionally, macroeconomic pressures in the Asia-Pacific region are contributing to slower procurement timelines, further affecting instrument sales. These delays in customer decision-making could limit near-term revenue growth and create quarterly revenue volatility.
Macroeconomic Concerns: PacBio operates in a capital-intensive industry, making it highly sensitive to macroeconomic conditions and global funding trends. Rising interest rates, inflation, and economic slowdowns could further delay purchasing decisions for high-cost sequencing instruments.
Additionally, geopolitical risks, including U.S.-China tensions, could impact PacBio’s business in Asia, particularly as China represents a key market for future growth. Any trade restrictions or export limitations could hinder PacBio’s ability to sell sequencing instruments in the region.
Estimate Trend
PacBio has been witnessing a positive estimate revision trend for 2025. Over the past 30 days, the Zacks Consensus Estimate for its adjusted loss per share has narrowed a cent to 70 cents.
The Zacks Consensus Estimate for revenues for 2025 is pegged at $159.5 million, indicating a 3.8% increase from the year-ago reported numbers.
Key Picks
Some better-ranked stocks in the broader medical space are Masimo (MASI – Free Report) , Boston Scientific (BSX – Free Report) and Cardinal Health (CAH – Free Report) . At present, Masimo sports a Zacks Rank #1 (Strong Buy), whereas Boston Scientific and Cardinal Health carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Masimo’s shares have rallied 30.1% in the past year. Estimates for MASI’s 2024 earnings per share (EPS) have increased 1.2% to $4.10 in the past 30 days. MASI’s earnings beat estimates in each of the trailing four quarters, the average surprise being 17.1%. In the last reported quarter, it posted an earnings surprise of 16.6%.
Estimates for Boston Scientific’s 2025 EPS have jumped 2.9% to $2.85 in the past 30 days. Shares of the company have surged 56.7% in the past year compared with the industry’s growth of 12.5%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.25%. In the last reported quarter, it delivered an earnings surprise of 7.69%.
Estimates for Cardinal Health’s fiscal 2025 EPS have increased 1.5% to $7.94 in the past 30 days. Shares of the company have gained 15.2% in the past year against the industry’s 4.1% decline. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.6%. In the last reported quarter, it delivered an earnings surprise of 10.3%.
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