NEW YORK – Canaccord Genuity said on Monday that it is initiating coverage of Pacific Biosciences with a Buy rating and a 12-month price target of $45.
In a note to investors, analyst Kyle Mikson said that recent developments at the company, including changes to the management team, a $900 million cash infusion, and the recent purchase of short-read sequencing firm Omniome, suggest long-term growth potential.
"With the recent acquisition of Omniome, PacBio could become the first and only company with both long-read sequencing and short-read sequencing offerings, a true game-changer," Mikson wrote. "With over 75 percent upside potential to our $45 price target, we believe PacBio shares are attractive at current levels."
Long-read sequencing is not just a niche market, he said, and PacBio's technology is differentiated from other such methods. Continuing a trend of lower prices should drive demand and open up new markets, such as large-scale population sequencing projects, he added.
Mikson attributed the company's "mixed" revenue performance in recent years to challenges in commercial execution, which is now a focus of the current executive team led by CEO Christian Henry, along with market expansion.
"We believe that the company has already exceeded the original expectations only one year into Henry's tenure," Mikson wrote.
In morning trading on the Nasdaq, shares of PacBio were down less than 2 percent at $25.17.