Pacific Biosciences of California (NASDAQ:PACB) Rallies

Pacific Biosciences of California (NASDAQ:PACB)

Pacific Biosciences of California (NASDAQ:PACB)

Pacific Biosciences of California (NASDAQ:PACB) stock was up by 14.38% even after the company reported disappointing Q2 results that fell short of Wall Street expectations. The rally came as investors reacted to a big order from a leading genetic service provider that validates the company’s sequencing technology.

Pacific Biosciences of California (NASDAQ:PACB) is a developer of sequencing systems used to resolve genetically complex problems. The company’s Single Molecule Real Time Technology enables single molecule real time detection of biological processes. The technology provides high accuracy ultra-long reads and the ability to detect epigenetic changes.

Thursday’s bullish run helped pull the stock up from its 2017 lows even though the stock continues to trade in a strong downtrend. The stock is currently trading in a tight $3.25 – $3.71 trading range, waiting to see if the momentum is strong enough to push the stock above resistance.

Pacific Biosciences of California (NASDAQ:PACB)
One month daily candlebar chart for PACB

Q2 Earnings

Pacific Biosciences of California (NASDAQ:PACB) reported revenues of $20.1 million for the second quarter, a slight decline from $20.7 million reported a year earlier. The company reported zero contractual revenue in the quarter compared to $3.6 million a year earlier. Product revenue was up 22% to $16.5 million. Service revenue, on the other hand, declined to just over $3.5 million.

Net loss in the quarter increased to (-$25.5) million compared to ($18.5) million for Q2 2016. A wider than expected net loss came on the increased cost of revenue that soared 19.5% to $12.1 million. Gross margin as result dropped from 51% to $40%. Total operating expenses were also up by 12.8% to $32.4 million.

Pacific Biosciences of California (NASDAQ:PACB) may continue to feel the effects of the U.S government clampdown on spending which has already forced a cut to its full year outlook. Competition from Illumina, Inc. (NASDAQ:ILMN) which is fresh from launching its NovaSeq system, is another headwind that could affect the company’s prospects going forward.

Novogene Sequel System Order

Separately, Pacific Biosciences of California (NASDAQ:PACB) has received a purchase order for 10 Sequel systems from Novogene Corporation. The order will bring to 20 the number of Sequel system that the DNA sequencing service provider is currently operating. The company is currently the biggest user of the Sequel platform.

“We are delighted that they have successfully ramped up their utilization of the systems so quickly and that high demand for SMRT Sequencing services in China has led them to already increase their capacity,” said Michael Hunkapiller Pacific Biosciences of California (NASDAQ:PACB) CEO.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: Monica has an undergraduate degree in Accounting and an MBA she earned – with Honors. She has six years of experience in the financial markets and has been an analyst for the past two years.

Author: Monica Gray

Monica has an undergraduate degree in Accounting and an MBA she earned - with Honors. She has six years of experience in the financial markets and has been an analyst for the past two years.

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