Please ensure Javascript is enabled for purposes of website accessibility

Why Pacific Biosciences of California Stock Jumped Today

By Keith Speights – Oct 2, 2020 at 3:37PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors are enthusiastic about an analyst's upgrade of the stock.

What happened

Shares of Pacific Biosciences of California (PACB 3.07%) were jumping 10.6% as of 3:15 p.m. EDT on Friday. The big gain came after J.P. Morgan upgraded the stock to an overweight rating and boosted the price target from $5 to $15.

So what

Analysts' upgrades don't always mean that a company's business prospects have really improved. But it's good to understand the rationale behind them.

Magnifying glass showing DNA with color-coded gene-sequencing read-out in the background

Image source: Getty Images.

J.P. Morgan analyst Tycho Peterson's renewed optimism about PacBio stemmed from his discussion with the company's CEO, Christian Henry. Peterson wrote to investors that PacBio has a new business strategy that left his team "encouraged about the abundant opportunities that lie ahead."

In particular, PacBio plans to expand its sales force to target U.S. and international markets. The company hopes to forge more partnerships along the lines of its deal with Berry Genomics. It also expects to develop new products that reduce gene sequencing costs to be competitive with short-read sequencing solutions.

Now what

It's a lot easier to develop a new strategy than to execute it. PacBio has a lot of work to do. The company reported a 30% year-over-year revenue decline in the second quarter. But if PacBio's new CEO can deliver on his promises, the healthcare stock should have plenty of room to run in the future. 

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Pacific Biosciences of California Stock Quote
Pacific Biosciences of California
$11.08 (3.07%) $0.33

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.