Cathie Wood, the founder of Ark Invest, has become a legend for her bold investments in transformative tech. With a keen eye for the next big thing, Wood’s portfolio is focused on companies that target disruptive innovation, spanning genomics, artificial intelligence (AI), and fintech. Her moves are closely watched by investors eager to catch her latest picks.
The genomics market is set to hit $411.35 billion by 2031, expanding at a CAGR of 19.4%, thanks to the groundbreaking discoveries and next-generation sequencing innovations. 10x Genomics, Inc. (TXG), a pioneering life sciences company that’s revolutionizing the field of genomics, is one of the biotech names that’s capturing Wood’s attention. Despite recent volatility in TXG stock, Wood’s enthusiasm hasn’t waned. She is grabbing the shares, and betting big on the company’s role in revolutionizing genomics.
With analysts like Jefferies also upbeat about TXG’s potential, and the beaten-down stock showing promising upside, Wood’s endorsement adds a powerful vote of confidence. Let’s take a closer look.
About 10x Genomics Stock
Founded in 2012, Pleasanton, California-based 10x Genomics, Inc. (TXG) is a life sciences tech innovator with a market cap of $2.4 billion. The company specializes in cutting-edge instruments, consumables, and software for biological system analysis. Its Chromium and Visium platforms revolutionize single-cell and spatial biology, offering solutions for gene expression, immune profiling, and epigenetics. With a global reach, 10x Genomics caters to academic, government, and biotech institutions, pushing the boundaries of biological research.
Over the past 52 weeks, shares of this life science tech company have taken a nosedive, plunging 67.8%. Most of that downside is fairly recent, with TXG down by 63.8% in 2024 alone.
From a valuation standpoint, TXG stock trades at 3.89x sales, lower than its closest peers like Azenta, Inc. (AZTA) and its own five-year average of 22.10x.
10x Genomics Falls Short of Q1 Earnings Projections
On April 30, 10x Genomics reported its fiscal Q1 earnings results. Total revenue rose 5% annually to $141 million, driven by spatial revenue growth, but missed Wall Street’s estimates. The company has not yet generated profits, and its Q1 net loss per share came in wider than expected at $0.50. The company closed the quarter with cash and cash equivalents and marketable securities of $371.8 million.
The company delivered four major new products in the last reported quarter, which set a new standard for single cell and spatial biology. In Q1, Visium HD helped drive strong growth in spatial. It also had a significant number of customers trial its new GEM-X products, contributing to lower quarter-end orders for Chromium. These new launches are expected to help accelerate growth as 10x Genomics moves through the year.
10x Genomics is set to report its fiscal Q2 earnings report after the market closes on Thursday, Aug. 8. For fiscal 2024, management projects its revenue to be between $670 million and $690 million, representing 8% to 12% growth over fiscal 2023.
Analysts tracking 10x Genomics don’t expect the company to achieve profitability on a GAAP basis until the end of this decade.
Cathie Wood’s TXG Bet
In July, Cathie Wood’s Ark Genomic Revolution ETF (ARKG) scooped up 10x Genomics shares, which is currently the fund’s No. 10 holding. With 2.57 million shares, TXG represents 3.61% of ARKG.
TXG is also the No. 18 holding in Wood’s flagship Ark Innovation ETF (ARKK), where the investor holds 7.95 million shares worth 2.66% of the fund’s weight.
What Do Analysts Expect for 10x Genomics Stock?
On July 22, Jefferies shifted gears on TXG stock, upgrading it from a "Hold" to a "Buy" with a price target of $24, indicating an 18.3% upside potential.
The brokerage firm noted, “Our Buy-rated thesis is predicated on conviction in return to growth in a single cell and continuation of favorable market dynamics in spatial. We like TXG's strong competitive position, which offers superior technology and customer stickiness, given technological consistency is crucial in the field.”
The firm’s optimism also stems from 10X Genomics' crucial role in oncology research and a solid customer base in core laboratories, which are less reliant on National Institutes of Health (NIH) funding.
Separately, analysts at Stifel Nicolaus and Canaccord Genuity also reiterated “Buy” ratings on TXG in July. Conversely, analysts at JPMorgan and Deutsche Bank both downgraded TXG stock this month, citing concerns about growing competition .
All things considered, analysts are cautiously optimistic about 10x Genomics stock, with a consensus “Moderate Buy” rating overall. Among the 18 analysts covering the stock, seven are highly bullish with a “Strong Buy,” one advises a “Moderate Buy,” nine are playing it safe with a “Hold,” and the remaining analyst is taking a hard stance with a “Strong Sell.”
The mean price target for TXG is $31.56, indicating an upside potential of 55% from current levels. The Street-high target price of $55 implies the stock could rally as much as 170.3%.
On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
