10x Genomics Offerings Not Yet Big Enough to Offset Core Business Deceleration – GS
2022.08.18 22:31
10x Genomics Offerings Not Yet Big Enough to Offset Core Business Deceleration – GS
By Sam Boughedda
A Goldman Sachs analyst downgraded shares of 10x Genomics (NASDAQ:TXG) to Sell from Neutral in a note Thursday, lowering the price target to $35 from $55.
The analyst said they expect a “materially slower cadence” to the company’s 2023/24 sales growth rate vs consensus (and historically) as it transitions to a multi-market, multi-product company.
The analyst’s and Goldman’s price target represents an 18% downside for 10x Genomics shares. They have fallen 7.7% during today’s session and are down more than 73% in 2022.
“We believe the durable growth rate for their single cell analysis business is below what Factset consensus has modeled over the next few years as their penetration into the academic market has hit a ceiling amongst the high utilization, core lab customers,” explained the analyst. “Case in point, their ‘halo’ customer base who do not own Chromium instruments has grown to over 50% of their customer base but less than 50% of their revenues. We believe this dynamic is an indication that, for the time being, TXG has reached a certain penetration rate amongst the large, core lab customers.”
“While we believe over the longer term, TXG can reaccelerate growth in single cell by expanding into the Biopharma and Diagnostic end markets, the spatial and in situ offerings are not yet of the size to help offset the deceleration in their core business,” he added.
