3 Promising Gene Sequencing Stocks to Watch Out For in 2022

As the year draws to a close, the world is faced with a new COVID-19 variant that is even more transmissible than the Delta variant. The year 2020 marked a turning point in global health and the whole world greatly struggled in the face of a single pathogen.

Despite the tragedy and ongoing uncertainty, the COVID-19 pandemic opened doors for scientific opportunities that presented several new capacities for a response to this crisis. While the development of vaccines at a tremendously rapid speed is one such feat, genomic sequencing is another significant one.

When it came to managing the outbreak, sequencing came to the rescue as it helped to rapidly detect SARS-CoV-2 and develop diagnostic tests as well as other tools. In fact, consistent genome sequencing aids in monitoring the disease’s spread and evolution of the virus. As new variants continue to form, genomic data has helped countries make informed public health decisions quickly.

With the growing need for genome sequencing, this space will create an alluring investment prospect amid the pandemic-induced challenges. Considering this, stocks like PerkinElmer, Inc. PKI, Thermo Fisher Scientific Inc. TMO and 10x Genomics, Inc. TXG show promise, backed by their solid growth potential.

Gene Sequencing: Prospects Shine Bright

As the pandemic still continues, new viral variants seem to be coming up from left, right and center. By now, it is quite understandable that the utilization of genome sequencing can be consolidated, and further extended to new settings and uses. Advanced integration of genome sequencing into the practices of the global health community is imperative in order to be better prepared for future threats.

The absence of sequencing will make public health authorities unaware of the viral mutations that can lower the efficacy of current response tools like tests and vaccines, to name a few. Apart from taking informed public health action, sequencing can help in conducting more efficient case investigations like tracing viral lineage, transmission and rate of evolution.

Additionally, genome sequencing can create a way for gauging the real-time effectiveness of the public health response and making adjustments accordingly. In the face of new strains, sequencing has provided information that enabled the quick development of vaccine boosters effective against variants.

The America Rescue Plan of 2021 directed $1.75 billion to the Centers for Disease Control and Prevention to support genomic sequencing and surveillance initiatives. Although improving national surveillance is critical for states to take timely action, the turnaround time from sample collection to sequence must be short and the data must be easily paired with patient metadata. In order to carry this out effectively, local sequencing is necessary. Considerable funds have been given to states to develop these sequencing programs.

Interestingly, the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 offered an additional $19.1 billion to states to bolster laboratory testing by broadening the usage of SARS-CoV-2 genomic sequencing and molecular epidemiology to lend support to state, local, and territorial health departments to establish capacity around COVID-19 mitigation activities, which include boosting the ability to detect and investigate cases, conducting contact tracing as well as implementing containment measures.

3 Gene Sequencing Stocks in Focus

Here are three genome sequencing stocks that investors might be interested in 2022, given their efforts to significantly enhance sequencing and ultimately ensure public health safety.

The first one is PerkinElmer, which currently carries a Zacks Rank #3 (Hold). This month, the company launched the research use only NEXTFLEX Variant-Seq SARS-CoV-2 Kit v2, with the aim of accelerating the detection of SARS-CoV-2 variants. This complete next-generation sequencing (NGS) solution will likely allow laboratories to boost sequencing throughput and make reliable variant identifications. The NEXTFLEX Variant-Seq SARS-CoV-2 Kit v2 will be using positive SARS-CoV-2 samples to detect mutations associated with all SARS-CoV-2 variants, including Omicron. PerkinElmer beat earnings estimates in each of the trailing four quarters, with the average being 21.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

PerkinElmer’s long-term earnings growth rate is estimated at 44.2%. The company’s earnings yield of 9.9% compares favorably with the industry’s 3.2%.

The second one is Thermo Fisher that presently carries a Zacks Rank of 2 (Buy). Recently, the company received FDA’s premarket approval for its NGS-based Oncomine Dx Target Test as a companion diagnostic to detect non-small cell lung cancer patients whose tumors carry epidermal growth factor receptor Exon20-insertion mutations. Per management, in case of scenarios wherein conventional testing might miss key mutations that could connect patients with targeted therapies, the NGS technology becomes crucial to make these connections and accelerate precision medicine. Thermo Fisher beat earnings estimates in each of the trailing four quarters, with the average being 9%.

Thermo Fisher’s long-term earnings growth rate is estimated at 14%. The company’s earnings yield of 3.6% compares favorably with the industry’s (3.6%).

The final one is 10x Genomics, a Zacks Rank #3 company that builds products to interrogate, understand and master biology to advance human health. Its integrated solutions include instruments, consumables, and software for analyzing biological systems at a resolution and scale that match the complexity of biology. With the company’s ability to measure gene expression proteins, epigenetic programming in new features and other modalities, customers currently have access to a comprehensive toolkit for interrogating biology of the right resolution and scale. Linked-Reads — a sequencing technology built by 10x Genomics — leverages microfluidics to partition and barcode HMW DNA for generating a data type that offers contextual information of the genome from short reads. This technology helps to consolidate multiple assays into a single, powerful workflow with low input requirements.

10x Genomics beat earnings estimates in each of the trailing four quarters, with the average being 51.4%. The Zacks Consensus Estimate for full-year 2022 revenues is pegged at $682.1 million, suggesting an improvement of 38% from the previous year, while the same for loss for the same period of 24 cents per share indicates an improvement from the previous year’s loss of 42 cents.

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