TXG's 2 major product lines are its Chromium platform, which enables single-cell analysis, and its Visium platform, which looks at spatial analysis - the "what" and the "where" of biological cell research. Company Overview: Visium and Chromium platforms If you take the viewpoint that the market has seen the worst of coronavirus and will continue to recover, then TXG ought to display stronger-than-average share price growth in the near term, and over the longer term can potentially trade above $100 on its strong growth prospects amid increasing demands for its products. It may take more than one year for TXG to deliver positive EPS, and there are some further caveats to take note of - chiefly, ongoing litigation with sector rival Bio-Rad Laboratories ( BIO ) over patent infringement which could damage sales of TXG's old and newer product lines, how much the company can grow its installed instrument base by, and whether its "halo-user" business model can work.īased on the potential future adoption of the company's products and services (and as a bonus, its attractiveness as an acquisition target), I would assign it a fair value price at a premium to current stock price ($57 at the time of writing), at ~$75. I believe that the company is well-placed to both increase revenues and reduce its overall cost burden in 2020, and that makes the current depressed stock price a tempting entry point into owning some TXG stock. In order to achieve profitability, TXG will need to increase its operating and net profit margins significantly, and there are already signs that this is happening - total operating expenses as a percentage of sales decreased from 156% in 2018 to 88% in 2019. The company has forecast sales of $350-360 million and growth of 42-46% for 2020, and is targeting a near-term market it says is worth $13 billion as well as a wider $50 billion+ global market for life sciences tools. Research derived from its products was featured in over 700 peer-reviewed publications in 2019, including important studies and breakthroughs in the fields of Alzheimer's, cancer treatment, autoimmune and age-related diseases, and HIV and antibody discovery and vaccine development. TXG has sold more than 1,660 of its instruments since mid-2015, adding another 645 sales in 2019, and estimates that it pulls through ~$150k in consumables revenue from each instrument. Similarly to bigger players in this sector such as Illumina ( ILMN) and Qiagen ( QGEN) - recently acquired by Thermo Fisher ( TMO) in an $11.5 billion deal, TXG sells instruments, consumables and software to a broad range of clients, including 19 of the top 20 global pharmaceutical companies and 96 of the top 100 global research institutions, according to a recent company presentation. The company posted a strong set of full-year financials with sales up by 68% from 2018 to $245.9 million, with its consumables division driving $206.9 million of this figure and instrument sales $34.9 million - a 4% yearly drop. 10x Genomics ( NASDAQ: TXG) looks like a promising play within the expanding gene sequencing sector.
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