10x Genomics stock crashed Thursday after the medtech reported preliminary third-quarter sales that widely missed Street expectations, thanks to a highly "disruptive" reorganization.
The company is a leader in spatial biology, a process that involves understanding where specific cells and tissues are within a sample. But the company is undergoing numerous commercial changes, and third-quarter sales of $151.7 million came in well below forecasts for $162.2 million to $162.4 million, William Blair analyst Matt Larew said in a report.
Management attributed the miss in part to recent commercial changes. In the Americas, where sales fell 11% year over year, 40% of accounts got a new owner during the quarter, he said. The commercial changes have been more disruptive than the company previously expected.
"This is unsurprising to us — as we wrote last quarter, our perspective on commercial leadership and strategy changes for growth companies is that they can be quite challenging and disruptive (10x's recent history supports that)," Larew said.
10x Genomics stock tumbled 24.7% to 15.67. Shares hit a record low at 14.02.
10x Genomics Stock: Instrument Sales Dive
10x sells systems capable of performing spatial biology reads called instruments and one-time use consumables to perform each test.
During the quarter, revenue from instruments plunged 46% to $19.1 million. That widely missed Larew's estimate for $27.1 million. Chromium, 10x's oldest system, brought in $7.6 million. Its spatial instruments generated $11.4 million.
"10x's Chromium business was likely significantly impacted by the modifications to the company's commercial organization, as this segment is far more established than the spatial business," Canaccord Genuity analyst Kyle Mikson said in a client note. "We believe it could take time for 10x to properly orient its Chromium commercial efforts."
He has a buy rating on 10x Genomics stock, but cut his price target to 20 from 32.
'Modest Rebound' In 2025?
Consumables revenue tumbled 10% to $126.2 million, while William Blair's Larew earlier forecast $129.9 million. That consisted of $96.5 million from Chromium tools and $29.7 million from its spatial consumables.
Services revenue climbed 48% to $6.4 million.
Larew noted customers are likely acting cautiously amid the reorganization. Still, he kept his market perform rating on 10x Genomics stock.
Mikson, the Canaccord analyst, trimmed his expectations for 2024 and now expects sales to come in at $616.2 million, which would be flat year over year. Previously, he forecast $640.4 million vs. the company's guidance for $640 million to $660 million.
"We assume a modest rebound in 2025, resulting in revenue of $687 million vs. our prior estimate of $720 million and consensus of $716.3 million," he said.
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