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On Thursday, TD Cowen reiterated its Hold rating on shares of 10X Genomics (NASDAQ:TXG), with a steady price target of $20.00. The firm's analysis followed 10X Genomics' preannouncement of a third-quarter sales shortfall, which fell approximately $11 million short of consensus expectations.
The underperformance in sales was primarily attributed to lower instrument sales, with spatial products contributing significantly to the decline. Additionally, the company's Single Cell Chromium products missed sales targets by $3 million.
The company cited a cautious capital expenditure environment and disruptions stemming from changes within its commercial organization as reasons for the weaker sales figures. Despite the shortfall in instrument sales, 10X Genomics had previously reported a second-quarter beat on consumable sales, indicating some resilience in that segment of their business.
10X Genomics' management has acknowledged the challenges they face, particularly in the Single Cell market segment. The market's growth has decelerated, and competition has intensified, which the company has identified as a key risk factor moving forward. These market conditions have put pressure on the company's sales, especially in the instrument category.
The analyst's remarks reflect the current state of 10X Genomics amidst a challenging environment for capital expenditures in the biotechnology sector. The firm's hold rating indicates a neutral stance on the stock, suggesting investors maintain their current positions without further buying or selling actions based on the latest financial data.
10X Genomics' stock performance and future prospects remain contingent on how the company adapts to the competitive landscape and any shifts in the capital expenditure climate. The maintained price target of $20.00 by TD Cowen suggests that the firm does not anticipate a significant change in the stock's valuation in the near term.
In other recent news, 10X Genomics reported a decrease in third-quarter earnings, with total revenue of approximately $151.7 million, marking a 1% decrease from the same period in the previous year. This was largely due to a significant drop in instrument sales, which fell by 46%, contributing to a total of approximately $19.1 million. On a positive note, consumables revenue saw a 10% increase, contributing to a total of approximately $126.2 million.
In response to these figures, several analyst firms maintained their ratings on 10X Genomics. Canaccord Genuity adjusted its price target for the company down to $20.00, yet maintained a Buy rating. Citi also reiterated its Buy rating, while BofA Securities and TD Cowen maintained Neutral and Hold ratings respectively.
In addition to these financial updates, 10X Genomics announced leadership changes, with Mennah Moustafa appointed as Chief Commercial Officer and Adam Taich as the new CFO. The company also plans to introduce new, cost-effective Single Cell products in the fourth quarter, as well as the launch of the Chromium Xo instrument, a lower-cost option for single-cell analysis.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on 10X Genomics' financial position and market performance. Despite the recent sales shortfall, the company's revenue growth remains positive, with an 11.14% increase over the last twelve months as of Q2 2024. This growth, albeit slower than desired, suggests that 10X Genomics is still expanding its market presence despite the challenges outlined in the article.
InvestingPro Tips highlight that 10X Genomics holds more cash than debt on its balance sheet, which could provide a financial cushion as the company navigates the current cautious capital expenditure environment. Additionally, the company's liquid assets exceed short-term obligations, potentially offering some stability during this period of sales underperformance.
However, it's important to note that 10X Genomics is not currently profitable, with a negative P/E ratio of -12.76 for the last twelve months as of Q2 2024. This aligns with the InvestingPro Tip indicating that analysts do not anticipate the company to be profitable this year, reflecting the ongoing challenges in the biotechnology sector.
Investors seeking a more comprehensive analysis can find 7 additional InvestingPro Tips for 10X Genomics, offering deeper insights into the company's financial health and market position.
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