Life science company 10x Genomics beat second-quarter sales forecasts, but TXG stock tumbled Friday on macroeconomic challenges and steep losses.
Chief Executive Serge Saxonov credited the strong launch of Xenium, a platform 10x launched in December. Xenium helps researchers map out where cells and molecules stand in relation to one another within tissue samples, a technology called spatial biology. In a report, Canaccord Genuity analyst Kyle Mikson said Xenium orders outpaced 10x's shipments in the second quarter.
CEO Saxonov says there's excitement behind the revolution in spatial biology. This technology could be part of the key to unlocking the answers to some diseases.
"We're getting feedback from our customers that Xenium is bigger than anything they've ever seen in our industry — maybe ever," Saxonov told Investor's Business Daily.
But on the stock market today, TXG stock skidded 4.2% to 56.04. That put shares below their 50-day moving average for the first time in a month, MarketSmith.com shows.
TXG Stock: Sales Beat, But Losses Continue
During the second quarter, 10x Genomics notched $146.8 million in sales, growing 28% over the year-ago period. That easily topped analyst projections for $140 million, according to FactSet.
Losses were deeper than expected, however, at 53 cents per share. TXG stock analysts called for a loss of 40 cents per share. In the year-earlier quarter, 10x lost 57 cents per share.
"Whenever you have a big instrument, especially something like Xenium — which is a big complex instrument — they have lower gross margins than consumables that go along with that instrument," Saxonov said. "We are in the early stages of the launch of this new product, so that naturally is putting pressure on the gross margins."
But 10x is working to make that up on the stronger-margin consumables, he added. Consumables are one-time instruments and tools that accompany 10x's platforms. Canaccord's Mikson noted 10x's consumables revenue climbed 15% during the quarter. He raised his price target on TXG stock to 70 from 65 and kept his buy rating.
Further, sales in China continue to struggle. In the first six months of the year, sales dropped 16% to $26.79 billion. Saxonov said second-quarter sales in the country were softer than expected. China is experiencing macroeconomic challenges and the continued fallout of the Covid pandemic.
"At the beginning of the year, we expected a recovery (in China) in the second half of the year," he said. "Now we expect it to be flat."
10x Raises Sales Outlook
The company also raised its outlook for the year and now expects sales to come in at $600 million to $620 million, up 16% to 20%. At the midpoint, that's $10 million higher than 10x's outlook from three months ago.
TXG stock analysts had predicted full-year sales of $601.7 million.
Saxonov says there's still a massive runway in front of 10x in the spatial biology space. Academic research and biopharma companies alike are embracing the revolution, he said.
10x's penetration into the spatial biology market is "tiny," he said. "We're just getting started."
TXG stock broke out of a flat base with a buy point at 56.22 in May, according to MarketSmith.com. Shares are now below the 5% buy zone. The stock also has an IBD Relative Strength Rating of 91, putting it in the top 9% of all stocks in terms of 12-month performance.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
