Shares of Pacific Biosciences of California (NASDAQ:PACB), a genome sequencing equipment manufacturer, are under pressure following a disappointing first-quarter report. The stock was down 15.7% as of 12:04 p.m. EDT on Thursday.
Consensus estimates were expecting a flat top line in the first quarter of 2018 due to a spike in shipments during the same period last year. Unfortunately, Pacific Biosciences of California wasn't able to ship quite a few systems during the first three months of 2018 because customers were still building facilities to house them. As a result, the company reported a disturbing 22% year-to-year plunge in first-quarter revenue.
Quarterly lumpiness aside, there were signs of encouragement. Overall, consumables revenue rose about 5% compared to last year to $9.1 million. Compared to the previous quarter, though, consumable sales fell 28% largely due to an abnormally large purchase recorded in late 2017.
The company's explanations for its revenue miss are reasonable, but they don't soothe concerns it will need to tap investors for a lot more cash before it reaches profitability. PacBio finished March with a $79.3 million cash balance after losing $24.2 million during the first three months of the year.
PacBio is still the only company offering the sort of hyper-accurate DNA reading machines that pointy-headed researchers can't get enough of. I'm still confident that Sequel system installs and the dependable consumable revenue they generate will return to growth, but investors might want to hold off until the company gets a little closer to making ends meet. Over the past year alone the number of outstanding PacBio shares has risen 35%. A few more quarters like this one, and investors' slice of any future profits could get much thinner.