On Thursday, Canaccord Genuity adjusted its price target for 10X Genomics (NASDAQ:TXG) shares, bringing it down to $20.00 from the previous $32.00, while still maintaining a Buy rating on the stock. This adjustment follows the company's preliminary third-quarter results for 2024, which were disclosed after the market closed on Wednesday and fell short of both the analyst's projections and the FactSet consensus.
The company's performance has recently been underwhelming, as evidenced by the preliminary report. Despite an increase in Chromium product revenue on a sequential basis, there was a year-over-year decline. Conversely, Spatial product revenue saw a decrease from the previous quarter, albeit with a slight year-over-year increase. Contributing factors to the quarter's performance included the company's recent commercial and organizational changes, as well as broader market challenges, such as customer capital constraints, which notably affected Xenium product placements.
The report from Canaccord Genuity indicates that while the company has managed to improve its execution in single-cell technology, this has been somewhat negated by a slowdown in spatial genomics. The analyst noted the difficulties faced by 10X Genomics but also acknowledged that these challenges are understandable. The forecast for 2024 suggests that the company's revenue may remain relatively unchanged compared to the previous year, with an anticipated growth of approximately 11% for 2025.
Despite the reduction in the price target and the company's recent struggles, Canaccord Genuity's stance remains optimistic. The firm believes that, based on the after-hours trading price on Wednesday, the stock presents a significant opportunity for long-term investors, with a potential upside of over 30% to the revised price target.
In other recent news, 10X Genomics reported underwhelming third-quarter earnings, with total revenue of approximately $151.7 million, a decrease from the same period in the previous year. This was largely due to a significant drop in instrument sales, with Chromium instruments and Spatial instruments generating $7.6 million and $11.4 million respectively, falling short of expectations.
On a brighter note, consumables revenue saw a 10% increase, contributing to a total of approximately $126.2 million. Geographically, while the Americas region experienced an 11% decrease in revenue, the EMEA and APAC regions recorded increases of 18% and 15% respectively.
Several analyst firms have maintained their ratings on 10X Genomics. Citi reiterated its Buy rating, while BofA Securities and TD Cowen maintained Neutral and Hold ratings respectively. Morgan Stanley, despite reducing its price target, maintained an Overweight rating, and Canaccord Genuity upheld its Buy rating.
In the midst of these financial developments, the company announced leadership changes, with Mennah Moustafa appointed as Chief Commercial Officer and Adam Taich as the new CFO. Also noteworthy is the company's plan to introduce new, cost-effective Single Cell products in the fourth quarter, as well as the launch of the Chromium Xo instrument, a lower-cost option for single-cell analysis.
InvestingPro Insights
To complement Canaccord Genuity's analysis, InvestingPro data offers additional insights into 10X Genomics' financial position. The company's market capitalization stands at $2.49 billion, reflecting its current valuation in the market. Despite the challenges highlighted in the article, 10X Genomics has shown a strong revenue growth of 11.14% over the last twelve months, with total revenue reaching $631.73 million.
InvestingPro Tips reveal that 10X Genomics holds more cash than debt on its balance sheet, which could provide financial flexibility as the company navigates through its current challenges. This aligns with the article's mention of market challenges and customer capital constraints affecting product placements.
Another relevant InvestingPro Tip indicates that the stock price movements are quite volatile. This volatility is evident in the recent price performance, with a strong 32.46% return over the last three months, contrasting sharply with a 62.81% year-to-date decline. This volatility underscores the potential opportunity for long-term investors mentioned by Canaccord Genuity, while also highlighting the risks involved.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further context to 10X Genomics' financial situation and market position.
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