Life Science Company 10x Genomics Struggles With Profitability, Analyst Says 2025 Guidance Bakes In NIH Funding Uncertainties

On Wednesday, 10x Genomics Inc TXG reported a fourth-quarter EPS loss of $(0.40), missing the consensus estimate of $(0.30).

The single-cell and spatial biology company reported quarterly sales of $165.02 million, down 10% year over year, beating the consensus of $159.39 million.

Gross margin was 67% for the fourth quarter of 2024 compared to 63% a year ago, primarily due to product mix changes.

10x Genomics' instruments sales fell to $24.35 million from $38.4 million a year ago. This included $10.93 million from Chromium instruments and $13.43 million from Spatial instruments.

Consumables sales decreased from $140.31 million to $133.53 million. Of this, Chromium consumables accounted for $97.74 million, and Spatial consumables generated $35.79 million.

Additionally, services revenue experienced a growth from $5.27 million to $7.14 million.

Guidance: 10x Genomics forecasts fiscal year 2025 sales of $610 million-$630 million, lower than the consensus of $631.14 million. At the midpoint, this guidance implies double-digit growth for both Chromium reactions and overall spatial revenue.

William Blair says the management noted that its guidance does not anticipate any improvements in the macro environment and contemplates a roughly $7 million impact from NIH funding uncertainties.

Analyst Reaction:

• William Blair notes that 10x has been improving its sales strategy and market position in recent quarters.
• Although these changes have hurt profits and are expected to continue doing so through at least early 2025, analyst Matt Larew writes that they are necessary for long-term growth.
• The company's commercial reorganization should be finished by mid-2025, and the pricing challenges from the GEM-X transition are expected to ease by the fourth quarter.
• William Blair keeps the Market Perform rating.
• Leerink Partners analyst Mike Kratky downgrades 10x Genomics from Outperform to Market Perform rating and lowers the price target from $25 to $12.
• Stifel analyst Daniel Arias maintains 10x Genomics with a Buy rating and lowers the price target from $21 to $18.
• UBS analyst Dan Leonard maintains 10x Genomics with a Neutral rating and has lowered the price target from $20 to $14.
• JP Morgan analyst Rachel Vatnsdal maintains the Neutral rating but cut the price target from $14 to $12.

Price Action: TXG stock is down 6% at $11.28 at the last check on Thursday.

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