NEW YORK – JP Morgan on Friday upgraded shares of Pacific Biosciences to an "Overweight" rating and increased its price target to $15 from $5.
A discussion with new PacBio CEO Christian Henry "provided an overview of the new strategy for the company going forward, leaving us encouraged about the abundant opportunities that lie ahead," JP Morgan Analyst Tycho Peterson wrote in a research note.
PacBio's strategic focus will include a sales force expansion to capture "low-hanging fruit in both the domestic and international markets," diagnostic partnerships similar to the firm's deal with Berry Genomics, and product development to bring down sequencing costs, Peterson wrote.
In afternoon trading on the Nasdaq, shares of PacBio were up more than 10 percent at $11.60.
The plan offers a roadmap for PacBio following the breakdown of an acquisition by Illumina, abandoned over regulatory concerns in the US and the UK.
The Sequel II system has now achieved the necessary throughput, read length, and accuracy to be a successful product and PacBio is ready to "unleash the system's market potential," Peterson wrote. He noted that PacBio "only has two large customers," LabCorp and the HudsonAlpha Institute for Biotechnology, and the firm has little sales presence in Germany, Japan, and Korea.
"Between the US and [ex-US] opportunities, management believes that commercial execution alone can drive significant top-line growth through 2023," Peterson wrote.
For R&D, PacBio seeks to bring down the cost per genome so that it is competitive with short-read sequencing, drawing in a larger portion of budgets, especially in population sequencing, he added.