1. 10x Genomics, Inc. (NASDAQ:TXG)
Upside potential as of November 14: 68.61%
10x Genomics, Inc. (NASDAQ:TXG) is a U.S.-based life science technology company. Its solutions include biological system analysis software, consumables, and devices. The company offers a variety of products, such as informatics software, chromium controllers, reagent kits, and 10x-compatible products. Consumables provide for the majority of its revenue.
10x Genomics, Inc. (NASDAQ:TXG)’s strong portfolio of intellectual property and the widespread recognition of its products show its commitment to innovation. The company has recently placed a high priority on technological development, launching technologies that aim to provide researchers with affordable and adaptable solutions. This includes tools like the GEM-X Flex and revolutionary product lines made to satisfy changing needs in research. For its competitive advantage and market conquest, it is essential to continuously improve its technology products.
Strong consumables demand in Q3 2024 contributed to the company’s noteworthy 70% gross margin growth over the previous year’s 62%. The net loss for the quarter was $35.8 million, down from $93 million YoY. Operating expenses were significantly reduced from $147.9 million in Q3 2024 to $176.6 million in Q3 2023, which led to this improvement.
Leerink Partners analyst Puneet Souda reaffirmed his Buy rating on 10x Genomics, Inc. (NASDAQ:TXG) on October 30, 2024, with a $25.00 price target. The company’s strong single-cell and spatial product portfolios remain industry leaders despite recent interruptions brought on by a major reorganization of the sales force that impacted 40% of US clients and a difficult market climate. Despite the short-term challenges, the reorganization is thought to be necessary for long-term growth. The management of the company seems to be managing the transition well, even if the consequences of these changes are anticipated to last until the middle of 2025.
Additionally, the launch of new products has resulted in reduced prices per sample and cell, which could put short-term pressure on revenues but should eventually be offset by higher volumes as per the analyst. Stable Xenium adoption and robust Visium HD ordering rates demonstrate the continued high demand for spatial products. These factors, along with management’s attempts to increase sales productivity and fill critical positions, imply that the most recent quarter might be a low point before a slow rebound starts in 2025, as per the analyst.
The Brown Capital Management Small Company Fund stated the following regarding 10x Genomics, Inc. (NASDAQ:TXG) in its first quarter 2024 investor letter:
“10x Genomics, Inc. (NASDAQ:TXG) is a leading life-science technology company developing and selling instruments, consumables and software for analyzing gene expression in cells. Gene expression controls the functioning of a cell and is fundamental to developing biological insights and advancing human health. 10x tools comprise three platforms: the original Chromium platform for analyzing loose single cells, which contributes the bulk of company revenue; the Visium platform for spatial analysis of tissue sample; and the recently released Xenium platform for subcellular spatial mapping. They are differentiated by their resolution, efficiency, accuracy, throughput, repeatability and simplicity. The tools are advancing academic research, particularly in the areas of oncology, immunology and neuroscience.
10x Genomics reported mixed fourth quarter results in mid-February, with revenue above expectations, but earnings falling short. However, as noted above, management’s revenue guidance of 8-12% growth for 2024 was a meaningful deceleration from 20% in 2023. Over the past 12-18 months, 10x Genomics has cemented itself as the leader of not only single-cell analysis, with its original Chromium platform, but also in spatial analysis. The company had successful launches of its Visium instrument in late 2022 and its new Xenium platform in early 2023. In addition, 10x Genomics defended its intellectual property in 2023, resulting in Nanostring, 10x’s main spatial competitor, filing for bankruptcy in February 2024. 10x Genomics is in a strong position to push the boundaries of life sciences and capitalize on research spending. We remain confident 10x Genomics has a strong opportunity for growth ahead.”
While we acknowledge the potential of the 10x Genomics, Inc. (NASDAQ:TXG), our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TXG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. 10 Best Genomics Stocks To Buy Right Now is originally published on Insider Monkey. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
