Is This Why Pacific Biosciences of California Surged This Week?

What happened

Shares of Pacific Biosciences of California (NASDAQ: PACB), a genetic-sequencing system manufacturer, rose 11% on Thursday and continued their climb into Friday’s session. Investors appear pleased with new productivity-boosting tools to be featured at this week’s meeting of the American Society for Microbiology.

So what

Pacific Biosciences’ single-molecule DNA-reading system is widely considered more accurate than more popular methods that splice together data from thousands of copies. Accuracy has made PacBio’s Sequel System a leading choice for academic researchers. And a new addition that makes it easier to sequence multiple microbes at the same time will help cement its position among microbiologists.

Image source: Getty Images.

Now what

Helping scientists lower per-sample costs by increasing throughput is a great way to please customers while boosting the recurring revenue that consumable chips and reagents generate. PacBio needs to execute on this front soon, or it could find itself in a tough spot. Total revenue fell 22% in the first quarter compared to the previous year, although shipping delays were partly to blame.

After losing $24 million during the first three months of 2018, the company finished March with just $79 million in cash, cash equivalents, and short-term investments. If product revenue doesn’t start moving in the right direction again soon, raising more capital could get tricky.

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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool recommends Pacific Biosciences of California. The Motley Fool has a disclosure policy.

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