Pacific Biosciences of California Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of genetic analysis technologist Pacific Biosciences of California (Nasdaq: PACB  ) mutated this morning, falling as much as 23.4% on heavy trading.

So what: The second-quarter report, released last night, was full of surprises: $10.6 million of revenue beat the pants off the $4.1 million average analyst estimate, and the $0.42 net loss per share was also smaller than expected. But all the good news was overshadowed by an immediate downgrade: JPMorgan reduced Pacific Biosciences from a buy to a hold with a new share price target at $10, down from $17.

Now what: I don't have any color commentary on why JPMorgan suddenly cut this stock on the eve of a terrific report. What I do know is this: Shares have fallen by 53% over the last six months, the company is finally shipping third-generation gene sequencing systems to revenue-making markets (which is why sales were so much higher than expected), and 97% of the 175 CAPS players with an opinion on the stock see it bouncing back. This Rule Breaker looks like a high-octane alternative to bigger and slower-moving rivals Life Technologies (Nasdaq: LIFE  ) or Illumina (Nasdaq: ILMN  ) .

Interested in more information on the gene-analysis industry? Take some action:

Fool contributor Anders Bylund holds no position in any of the companies discussed here. Motley Fool newsletter services have recommended buying shares of Pacific Biosciences of California and Illumina. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is investors writing for investors.


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  • Report this Comment On August 05, 2011, at 12:03 PM, VCOldTimer wrote:

    GS came out with a negative report on ILMN which drove PACB and GNOM down. Does anyone have feedback on channel check and whether genetic analysis has potential to move beyond the lab and government markets? That is the key to whether or not you like these companies.

  • Report this Comment On August 05, 2011, at 12:45 PM, CADeb wrote:

    This company did everything I expected from them - added to their backlog, started delivering and recognizing revenue, and lowered their estimated loss. They continue to make improvements in speed and accuracy in the 3rd generation of this type of product. Today's prices are a bargain of the best kind. Bought more this morning.

  • Report this Comment On August 05, 2011, at 4:37 PM, David369 wrote:

    This would be the time to buy. Innovative product with no other company providing anything that does the same thing as easy or as fast. They are selling them as fast as they can build them. What could be better???

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