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Pacific Biosciences' Shares Plummet on Backlog Concerns

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Shares of Pacific Biosciences fell around 33 percent in mid-afternoon trade Friday after the firm released better-than-expected second-quarter financials but reported backlog orders that were lighter than expected by analysts.

The Menlo Park, Calif.-based single-molecule real-time sequencing technologies firm reported after the close of the market Thursday second-quarter revenues of $10.6 million, well above the consensus estimate of $4.1 million. It also beat estimates on the bottom line.

However, it also reported that it ended the second quarter with a backlog of 35 systems — of which seven were added in Q2 — translating to revenues of $22 million, which it plans to realize by the end of the year. The backlog is smaller than analysts had expected and has raised concerns about future sales.

"While there were additions, we're concerned that they have not accelerated perhaps due to both a difficult funding environment and [PacBio's] technology still not producing data on par with similarly priced systems," Oppenheimer analyst David Ferreiro wrote in a research note published Friday.

He cut his price target on the firm's stock to $8 from $15, but maintained a Perform rating.

William Blair analyst Amanda Murphy raised similar concerns, saying the backlog was "a bit lighter than we had expected." She also noted management's comments about funding concerns and the possibility of prospective customers waiting for the next reagent upgrade as reasons for the shortfall.

"As more machines are out in the field and more data is published on the RS, we will get more visibility into the longer-term adoption curve of the RS," Murphy wrote in a note published today.

She maintained a Market Perform rating on the stock.

About an hour before the market closed Friday, PacBio's shares were down $3.27 at $6.63.