Genetic sequencing stocks are shares in companies that use genetic sequencing technology to analyze DNA. These companies are the engines underpinning the field of genomics and are a critical component of genetic research and testing. Advancements in technology are making sequencing cheaper, faster, and more accurate.
Sequencing volumes continue to increase in research and are growing rapidly in clinical applications. Key drivers of this growth include whole-genome sequencing, cancer testing, and recurrence monitoring.
The global genetic sequencing market is projected to grow to roughly $92 billion by 2033. Meanwhile, ARK Investment Management estimates sequencing costs will continue to decline sharply. Falling costs are a critical factor in opening new markets and uses.
Top genetic sequencing stocks to consider
These are some of the leading pure-play genetic sequencing companies:
1. Illumina
Since its 1998 founding, Illumina (ILMN +2.64%) has become an industry leader with roughly 70% of the global market share and an installed base of around 21,000 sequencing systems.
NASDAQ: ILMN
Key Data Points
Human DNA contains 3.05 billion base pairs. Illumina gained its dominant market position by championing short-read sequencing technology, which breaks DNA into short segments to aid in analysis for genetic research. As the sequencing market expands from research to clinical applications, Illumina is developing tools to help physicians diagnose patients and select treatments.
The desire to play a larger role in clinical testing led Illumina to make a controversial move in August 2021: It completed the $8 billion acquisition of cancer testing company Grail despite an ongoing European Commission review over monopoly concerns. Illumunia ultimately spun off Grail as a separate entity in 2024.
The company believes it still has a significant growth opportunity, with increasing demand for oncology therapy selection and minimal residual disease detection, as well as a broader adoption of whole genome sequencing. Illumina estimates its total addressable market tops $100 billion in the clinical arena, plus more than $25 billion in research settings.
2. Pacific Biosciences of California
Pacific Biosciences of California (PACB -3.13%), also known as PacBio, is pioneering long-read sequencing technology, which uses longer DNA segments to map the entire genome.
NASDAQ: PACB
Key Data Points
Long-read sequencing can uncover parts of the genome missed by short-read sequencing. Although the Human Genome Project was declared complete in 2003, it missed about 8% of the genome. PacBio highlighted the benefits of its HiFi whole-genome sequencing technology by helping scientists fill in the remaining 8%.
Illumina tried to acquire PacBio in 2018. However, the Federal Trade Commission opposed the deal. The two companies agreed to terminate their merger agreement in early 2020.
PacBio continues to challenge its much bigger rival. Its latest technology, the Revio sequencing platform, is the fastest-growing platform in its history. Like Illumina, it sees major growth opportunities, especially in cancer genomics.
Unlike Illumina, though, PacBio isn't profitable. The company is working to improve efficiency, reduce costs, and lower its cash burn.
3. 10x Genomics
10x Genomics (TXG -3.48%) was founded in 2012 to "build solutions for scientific discovery that reveal and address the true complexities of biology and disease." The company manufactures instruments, consumables, and software for whole-genome, exome, and single-cell transcriptomic sequencing.
NASDAQ: TXG
Key Data Points
The company competes against Illumina and PacBio. One key competitive advantage it offers is that it markets the only sequencing technology that supports real-time analysis.
Although Oxford Nanopore's market share remains relatively small, over the last five years, its revenue has increased by a compound annual growth rate of 28%. The company makes around 70% of its revenue from consumable sales.
Oxford Nanopore's shares aren't listed on any U.S. stock exchanges. However, U.S. investors can buy the stock on over-the-counter (OTC) markets.
How to buy a genetic sequencing stock
- Open your brokerage account: Log in to your brokerage account where you handle your investments. If you don't have one yet, take a look at our favorite brokers and trading platforms to find the right one for you.
- Search for the genetic sequencing stock: Enter the ticker “[ticker]” into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Benefits and risks of investing in genetic sequencing stocks
The benefits of investing in genetic sequencing stocks include:
- Significant growth potential
- Declining costs are expanding the opportunities for genetic sequencing
- Genetic sequencing stocks provide an opportunity to take part in improving healthcare for many people
However, there are some risks associated with investing in genetic sequencing stocks, including:
- The potential for high volatility
- Increasing competition
- The potential for regulatory setbacks
Should you invest in genetic sequencing stocks?
Whether or not to invest in genetic sequencing stocks depends largely on your risk tolerance and investment time horizon. If you're risk-averse and have a relatively short investment time horizon, genetic sequencing stocks may not be the best investment choice. On the other hand, if you have a more aggressive investing style and a longer investment time horizon, genetic sequencing stocks offer an opportunity for market-beating returns.
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FAQ
Genetic sequencing stocks FAQ
About the Author
Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends 10x Genomics and Pacific Biosciences Of California. The Motley Fool recommends Illumina. The Motley Fool has a disclosure policy.
