PACB - Pacific Biosciences: Navigating Rough Waters In Gene Sequencing Seas

2024-06-03 04:25:05 ET

Summary

• Pacific Biosciences' SMRT sequencing has higher error rates (or so the perception goes) than Illumina's, which has an impact on cost and time efficiency.
• Despite efforts to improve perceptions around its sequencing accuracy, Pacific still faces apparent skepticism from its customer base.
• Q1 earnings reflect challenges with low gross margins and high SG&A costs, highlighting financial strains.
• High operational and financial risks suggest a 'sell' recommendation for Pacific Biosciences' stock.

Challenges and Competition in Pacific Biosciences' Sequencing Technology

Pacific Biosciences of California ( PACB ) specializes in genetic sequencing technology. The company is well-known for its Single Molecule, Real-Time [SMRT] sequencing technology, which enables long-read sequencing capabilities. However, compared to competitors like Illumina ( ILMN ), with platforms like HiSeq and NovaSeq, SMRT has comparatively higher error rates and, thus, necessitates multiple reads ( Genome Biology ), which adds to the cost and time involved....

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