Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at PacBio (NASDAQ: PACB) and the best and worst performers in the life sciences tools & services industry.
The life sciences tools and services sector supports biotech and pharmaceutical R&D and commercialization by providing lab equipment, data analytics, and clinical trial services. These companies benefit from recurring revenue and high margins on specialized products. Looking ahead, the sector is supported by tailwinds like advancements in genomics, personalized medicine, and the use of AI in drug discovery. However, the persistent challenge is dependence on the R&D budgets of large pharmaceutical companies and the volatility of smaller biotech firms. Future headwinds include uncertain research funding and pricing pressures from cost-conscious customers.
The 19 life sciences tools & services stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 1.7% while next quarter’s revenue guidance was 1% below.
In light of this news, share prices of the companies have held steady as they are up 2.7% on average since the latest earnings results.
PacBio (NASDAQ: PACB)
Pioneering what scientists call "HiFi long-read sequencing," recognized as Nature Methods' method of the year for 2022, Pacific Biosciences (NASDAQ: PACB) develops advanced DNA sequencing systems that enable scientists and researchers to analyze genomes with unprecedented accuracy and completeness.
PacBio reported revenues of $38.44 million, down 3.8% year on year. This print fell short of analysts’ expectations by 4.5%. Overall, it was a slower quarter for the company with a significant miss of analysts’ revenue estimates.
“While revenue came in slightly below our expectations this quarter, we achieved another all-time record for consumable revenue, expanded gross margins and continued to reduce our operating expenses,” said Christian Henry, President and Chief Executive Officer.
PacBio delivered the weakest performance against analyst estimates of the whole group. Unsurprisingly, the stock is down 7% since reporting and currently trades at $1.78.
Read our full report on PacBio here, it’s free for active Edge members.
Best Q3: 10x Genomics (NASDAQ: TXG)
Founded in 2012 by scientists seeking to overcome limitations in traditional biological research methods, 10x Genomics (NASDAQ: TXG) develops instruments, consumables, and software that enable researchers to analyze biological systems at single-cell resolution and spatial context.
10x Genomics reported revenues of $149 million, down 1.7% year on year, outperforming analysts’ expectations by 4.6%. The business had an incredible quarter with a beat of analysts’ EPS estimates and revenue guidance for next quarter exceeding analysts’ expectations.
The market seems happy with the results as the stock is up 31.6% since reporting. It currently trades at $17.10.
Is now the time to buy 10x Genomics? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: Avantor (NYSE: AVTR)
With roots dating back to 1904 and embedded in virtually every stage of scientific research and production, Avantor (NYSE: AVTR) provides mission-critical products, materials, and services to customers in biopharma, healthcare, education, and advanced technology industries.
Avantor reported revenues of $1.62 billion, down 5.3% year on year, falling short of analysts’ expectations by 1.4%. It was a softer quarter as it posted a slight miss of analysts’ revenue estimates and a miss of analysts’ organic revenue estimates.
Avantor delivered the slowest revenue growth in the group. As expected, the stock is down 23.7% since the results and currently trades at $11.50.
Read our full analysis of Avantor’s results here.
Charles River Laboratories (NYSE: CRL)
Named after the Massachusetts river where it was founded in 1947, Charles River Laboratories (NYSE: CRL) provides non-clinical drug development services, research models, and manufacturing support to pharmaceutical and biotechnology companies.
Charles River Laboratories reported revenues of $1.00 billion, flat year on year. This result surpassed analysts’ expectations by 1.1%. Overall, it was a satisfactory quarter as it also produced a narrow beat of analysts’ organic revenue estimates.
The stock is down 5% since reporting and currently trades at $168.97.
Waters Corporation (NYSE: WAT)
Founded in 1958 and pioneering innovations in laboratory analysis for over six decades, Waters (NYSE: WAT) develops and manufactures analytical instruments, software, and consumables for liquid chromatography, mass spectrometry, and thermal analysis used in scientific research and quality testing.
Waters Corporation reported revenues of $799.9 million, up 8% year on year. This print topped analysts’ expectations by 2.4%. Zooming out, it was a satisfactory quarter as it also produced an impressive beat of analysts’ organic revenue estimates but a miss of analysts’ EPS guidance for next quarter estimates.
The stock is up 8.9% since reporting and currently trades at $376.57.
Read our full, actionable report on Waters Corporation here, it’s free for active Edge members.
Market Update
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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