10X Genomics stock downgraded on single-cell revenue concerns

TD Cowen adjusted its stance on 10X Genomics (NASDAQ: TXG ) on Wednesday from a Buy rating to a Hold rating. The company also lowered its price target on the stock to $32.00 from the previous price of $57.00. The change comes after the company's first-quarter results, which continued to show a pattern of underperformance across its single-cell product line. The company's space product line has been growing, somewhat offsetting the underperformance.

10X Genomics reports that its single-cell products account for about 65% of the company's revenue, but it still faces challenges. Analysts at TD Cowen stressed that pressure on the single-cell sector persists and there is limited visibility on when a recovery will occur. Despite strong growth forecasts for the space product line, uncertainty in the single-cell segment has led the company to reassess the risk/reward balance.

TD Cowen's new price target is $32.00, based on 5 times price-to-sales (P/Sales), a valuation metric used to compare a company's stock price to its revenue. This is a significant decrease from the previous price target of $57.00, indicating a more conservative financial outlook for the company.

Analyst comments reflected concerns about the difficulties 10X Genomics continues to face in its single-cell pipeline. While the space product line has been a bright spot, overall sentiment suggests that challenges in the single-cell segment may continue to impact the company's performance.

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Investors and market watchers will likely keep a close eye on 10X Genomics in the coming months to see if the company can resolve issues with its single-cell business and improve its overall financial health. TD Cowen's revised rating and price target are the latest indicators of the company's current market position.

Investment Professional Insights

As TD Cowen revise its outlook for 10X Genomics, data from InvestingPro provides more context on the company's financials and market performance. The company's market capitalization is $3.22 billion, reflecting its current market valuation. Notably, 10X Genomics maintains a strong balance sheet with more cash than debt, giving it a degree of financial flexibility. That's especially important given that analysts don't expect the company to make a profit this year.

The stock's price-to-earnings (P/E) ratio for the trailing twelve months to Q4 2023 was -15.28, suggesting investors are pricing the company's shares based on future earnings rather than current profitability. This is consistent with InvestingPro Tip that the share price has been quite volatile, with a 1-month total price return of -20.97% and a 3-month total return of -32.81%, highlighting the stock's near-term performance challenges.

In terms of liquidity, 10X Genomics has more current assets than short-term debt, which may reassure investors of the company's ability to meet its immediate financial liabilities. For those considering investing, it's worth noting that 10X Genomics does not pay dividends, which may impact investment strategies for income-focused portfolios.

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InvestingPro provides additional insights and tips on 10X Genomics, which is valuable for deeper analysis. To explore this content further, consider subscribing to InvestingPro using the coupon code PRONEWS24 Annual or biennial Pro and Pro+ subscriptions receive an additional 10% discount. 10X Genomics also provides 6 InvestingPro tips to further inform your investment decisions.

This article was generated with the support of artificial intelligence and reviewed by an editor. For more information, please see our terms and conditions.

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