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On Thursday, Canaccord Genuity maintained its Buy rating on shares of Akoya Biosciences Inc (NASDAQ: AKYA), but reduced the price target to $3.50 from the previous $6.00.
The adjustment followed Akoya Biosciences' announcement of their third-quarter financial results, which fell short of both the analyst's expectations and the FactSet consensus. The company's revenue guidance was revised downward for the third consecutive quarter, citing a muted near-term outlook.
Akoya Biosciences reported its quarterly earnings after the market closed on Thursday, revealing significant underperformance. The reasons identified for the revenue shortfall included prolonged sales cycles and restricted funding for capital equipment. Moreover, a recent restructuring of the sales force and the transition phase that followed contributed to some operational disruptions.
Despite the reduced revenue outlook and the company's acknowledgment that it will not reach cash flow breakeven in the fourth quarter of 2024 as previously anticipated, Canaccord Genuity remains optimistic about Akoya's potential for near-term growth. The company expressed confidence in its ability to return to growth in 2025, supported by new products and biopharma revenue.
Canaccord Genuity has revised downward its revenue estimates within its 10-year discounted cash flow (DCF) model, leading to the new price target. The firm believes that Akoya's shares are currently undervalued, considering the potential upside to the revised price target. Despite the adjustments and the challenges faced by Akoya Biosciences, the investment firm's outlook on the stock remains positive.
In other recent news, Akoya Biosciences reported a 25% year-over-year decline in Q3 revenue, falling to $18.8 million. This decrease was primarily attributed to lower capital equipment purchases. However, the company did see an 11% increase in reagent revenue and an improvement in gross margins to 62.3%. These developments are part of Akoya Biosciences' ongoing efforts to enhance operational efficiencies and shareholder value.
Furthermore, the company anticipates full-year 2024 revenue to be between $80 million and $85 million. Akoya Biosciences also plans to focus on application-driven selling to drive reagent revenue growth. The company's clinical trial pipeline is expected to significantly contribute to 2025 revenue, with strategic investments planned in commercial operations to support future growth.
Despite the revenue decline, Akoya Biosciences remains optimistic, citing promising clinical trial results and partnerships that could lead to new product launches. However, it is important to note that the company's instrument revenue significantly declined by 53% in Q3, and operating expenses resulted in an $8.3 million loss from operations.
InvestingPro Insights
Recent InvestingPro data provides additional context to Akoya Biosciences' financial situation. The company's market capitalization stands at $154.93 million, with a revenue of $93.22 million over the last twelve months as of Q2 2024. Despite a 9.66% revenue growth over this period, Akoya is not currently profitable, with an operating income margin of -51.65%.
Two relevant InvestingPro Tips highlight Akoya's financial challenges. First, the company is "quickly burning through cash," which aligns with Canaccord Genuity's concerns about reaching cash flow breakeven. Second, analysts do not anticipate the company will be profitable this year, consistent with the reported negative earnings and reduced outlook.
On a positive note, Akoya has shown a strong return of 42.92% over the last three months, suggesting some investor optimism despite the recent earnings disappointment. For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for Akoya Biosciences.
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