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JP Morgan Downgrades Pacific Biosciences to Neutral

NEW YORK – Investment bank JP Morgan said Sunday that it is downgrading Pacific Biosciences from an Overweight to a Neutral rating and withdrew its price target for the firm, following the sequencing instrument maker's announcement last week of a revenue shortfall for the first quarter.

Last Tuesday, PacBio had said that it expects $38.8 million in revenues for Q1, well below the Wall Street consensus estimate of $50.30 million, resulting in a sharp downturn of its shares. The firm also lowered its revenue guidance for 2024, announced operating cost cuts of $50 million to $75 million by the end of the year, and withdrew its long-term annual revenue target of $500 million by 2026.

"While we continue to have confidence in the sequencing market and believe that [PacBio] is the best way to capitalize on long-read sequencing trends over the long term, we believe that shares of [PacBio] will continue to be pressured in the near term as investors look for execution and data points demonstrating the market opportunity for Revio and long-read sequencing remains intact," JP Morgan analyst Rachel Vatnsdal and colleagues wrote in a note to investors.