Why Is Pacific Biosciences of California Stock Soaring Today?

Stephens initiated coverage on Pacific Biosciences of California Inc PACB, noting a solid management team, the market opportunity of long-read, and refraining from taking over the short-read market. 

PACB offers next-generation sequencing (NGS) products and solutions. The analyst views it as a large, attractive end market with a significant growth runway.

The analyst notes Revio, its next-generation long-read sequencer as a disruptive technology.

Revio is driving broader adoption of long-read within existing applications while expanding the use case for long-read sequencing in new applications.

The analysts Mason Carrico and Jacob Krahenbuhl have initiated with an Overweight rating and a price target of $11.

The company plans to add additional long- and short-read platforms to its portfolio with varying throughput capabilities to reach a broader customer base, allowing PACB to capture more sequencing dollars across the NGS market, which is expected to provide incremental growth tailwinds to the company in the out years. 

Stephens is bullish on the long-read opportunity and notes that PACB's expertise within this high-growth market segment will enable the company to remain one of the fastest-growing names in the comp group over the next few years.

PacBio reported Q3 sales of $55.7 million, up 72% Y/Y.

Instrument revenue of $34.7 million compared with $11.4 million in the prior-year period. Instrument revenue in the third quarter of 2023 included revenue recognized from 52 Revio sequencing systems.

Price Action: PACB shares are up 11% at $9.84 on the last check Thursday.