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Oppenheimer Lowers EPS, Revenue Estimates for PacBio Following Layoffs

NEW YORK (GenomeWeb News) – Investment bank Oppenheimer today cut Pacific Biosciences' 2011 EPS estimate and 2012 to 2014 revenue estimates following the company's announcement earlier this week that it was slicing its workforce by 130 positions.

Oppenheimer analyst David Ferreiro lowered PacBio's 2011 EPS to $2.22 from an earlier estimate of $2.35. He maintained an estimate of $35.5 million in revenues for the year and an Outperform rating but halved the 12 to 18-month price target on the company's stock to $4 from $8.

He also lowered revenue estimates for 2012 to $58.6 million from $66 million. Today's revised figures follow reduced estimates last month by Oppenheimer after PacBio reported lower-than-expected backlogs during its second-quarter earnings release.

In August, Ferreiro lowered 2011 EPS from $2.68 and 2012 revenue estimates from $87.1 million.

Today, he also lowered revenue estimates for 2013 to $80 million from an earlier prediction of $119 million and 2014 revenue estimates to $102 million from $165 million.

Last month, he lowered 2013 revenue estimates from $156 million and 2014 revenues estimates from $230 million.

In the research note published today, Ferreiro said that although PacBio is hopeful that the fourth-quarter 2011 introduction of its C2 chemistry for its RS single-molecule, real-time sequencing platform will drive demand for the instrument, "we are concerned that system specifications will still fall short of competing with established [next-generation sequencing] platforms."

While PacBio has not updated backlog figures for the instrument, Ferreiro said that "it is apparent that backlog growth has not accelerated," and reduced his forecast for 2012 system installations to 65 from 75.

On Tuesday PacBio said that the 28 percent reduction in its workforce was necessitated by a slower-than-anticipated adoption of its sequencing platform and is expected to curb its cash burn.

The company's R&D operations will be most affected by the cuts, but Ferreiro said PacBio remains committed to investments in direct RNA sequencing and the detection of methylated bases, as well further development of its chemistry.

In late Thursday trade on the Nasdaq, shares of PacBio were down 10 percent at 3.84 on the Nasdaq, compared to a more than 4 percent drop in the Dow Jones Industrial Average. The firm's shares have fallen 36 percent since the beginning of this week.

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