{
  "@context": "https://frontierpicks.com/schemas/dossier.v1.json",
  "ticker": "PACB",
  "name": "Pacific Biosciences of California, Inc.",
  "url": "https://frontierpicks.com/dossiers/PACB/",
  "json_url": "https://frontierpicks.com/dossiers/PACB.json",
  "status": "DORMANT",
  "current_conviction": "LOW",
  "archetype": {
    "code": "a4",
    "n": 4
  },
  "current_thesis": "Pacific Biosciences' shares are more likely to lag the S&P 500 after Q3 2026 showed gross margin falling to 33% from 41% and a guide cut to $155–160M, followed by a $100M at-the-market stock program. The fourth-quarter report, expected in February 2027, shows whether margin and consumable sales recover.",
  "invalidation_trigger": "A daily close above $2.90, above every close since the 2026-11-04 report, which would show the shares leading the S&P 500; or full-year 2026 revenue above $160M, the top of the narrowed guide.",
  "catalyst_date": "2026-11-16",
  "portfolio": null,
  "pick": null,
  "themes": [
    "medtech-diagnostics"
  ],
  "tags": [],
  "sources": [],
  "caveats": [],
  "source_links": [
    {
      "title": "PACIFIC BIOSCIENCES OF CALIFORNIA, INC. - Form 8-K - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0001299130/000129913026000133/earnings8-kxex991xq3x26.htm",
      "date": null
    },
    {
      "title": "PACIFIC BIOSCIENCES OF CALIFORNIA, INC. - Form 8-K - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0001299130/000110465926125166/tm2629325d1_8k.htm",
      "date": null
    },
    {
      "title": "PACIFIC BIOSCIENCES OF CALIFORNIA, INC. - Form 424B5 - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0001299130/000110465926125153/tm2629324d1_424b5.htm",
      "date": null
    },
    {
      "title": "Pacific Biosciences Enters Agreement for At-the-Market Stock Offering",
      "url": "https://www.tipranks.com/news/company-announcements/pacific-biosciences-enters-agreement-for-at-the-market-stock-offering",
      "date": null
    },
    {
      "title": "PacBio Announces Third Quarter 2026 Financial Results",
      "url": "https://www.streetinsider.com/dr/news.php?id=27289796",
      "date": null
    },
    {
      "title": "Pacific Biosciences Q3 Revenue Grows 6% as Vega Transition Pressures Margins",
      "url": "https://www.panabee.com/news/pacific-biosciences-earnings-q3-2026",
      "date": null
    }
  ],
  "evidence": [
    {
      "claim": "Q3 2026 revenue was $40.6M vs. $38.4M in Q3 2025; instrument revenue $13.2M vs. $11.3M; consumable revenue $20.8M vs. $21.3M.",
      "source": "PacBio Q3 2026 earnings release (8-K Exhibit 99.1)",
      "as_of": "2026-11-04"
    },
    {
      "claim": "Q3 2026 GAAP gross margin was 33% vs. 41% a year earlier; non-GAAP 36% vs. 42%, attributed to memory costs and Vega manufacturing transition costs.",
      "source": "PacBio Q3 2026 earnings release (8-K Exhibit 99.1)",
      "as_of": "2026-11-04"
    },
    {
      "claim": "Cash, equivalents and investments were $199.4M on 2026-09-30 vs. $279.5M on 2025-12-31; convertible senior notes $643.1M net; stockholders' deficit $61.4M.",
      "source": "PacBio Q3 2026 earnings release (8-K Exhibit 99.1)",
      "as_of": "2026-09-30"
    },
    {
      "claim": "Full-year 2026 revenue guidance was narrowed to $155–160M from $155–165M.",
      "source": "PacBio Q3 2026 earnings release (8-K Exhibit 99.1)",
      "as_of": "2026-11-04"
    },
    {
      "claim": "Q3 2026 placements: 35 Vega systems vs. 32 (over 90% to new customers) and 15 Revio systems vs. 13; Revio annualized pull-through about $204,000 vs. $236,000.",
      "source": "PacBio Q3 2026 earnings release (8-K Exhibit 99.1)",
      "as_of": "2026-11-04"
    },
    {
      "claim": "PacBio entered a sales agreement with Allen & Company for an at-the-market offering of up to $100M of common stock, with commission up to 3.0% of gross proceeds.",
      "source": "PacBio Form 8-K and Form 424B5 prospectus supplement",
      "as_of": "2026-11-10"
    },
    {
      "claim": "CFO Jim Gibson stepped down; CEO Mark Van Oene was named interim CFO and Bill Meyer Chief Accounting Officer.",
      "source": "PacBio Form 8-K",
      "as_of": "2026-11-04"
    },
    {
      "claim": "James Gibson II exercised 500,000 options at $1.18 and sold 661,815 shares at $3.11 on 2026-10-06 under a Rule 10b5-1 plan.",
      "source": "SEC Form 4 filed 2026-10-08",
      "as_of": "2026-10-06"
    }
  ],
  "view_changes": [],
  "frame": null,
  "filed_numbers": {
    "as_of": "2026-11-13",
    "sector": "Healthcare",
    "financials": {
      "status": "ok",
      "reason": null,
      "close_date": "2026-11-13",
      "latest_quarter": "2026-09-30",
      "figures": {
        "revenue": {
          "status": "ok",
          "quarters": [
            {
              "end": "2026-09-30",
              "filed": "2026-11-05",
              "restated": null,
              "value_musd": 40.6,
              "yoy_pct": 5.5
            },
            {
              "end": "2026-06-30",
              "filed": "2026-08-06",
              "restated": null,
              "value_musd": 39,
              "yoy_pct": -1.9
            },
            {
              "end": "2026-03-31",
              "filed": "2026-05-08",
              "restated": null,
              "value_musd": 37.2,
              "yoy_pct": 0.1
            },
            {
              "end": "2025-12-31",
              "filed": "2026-02-25",
              "restated": null,
              "value_musd": 44.6,
              "yoy_pct": 13.8
            },
            {
              "end": "2025-09-30",
              "filed": "2025-11-06",
              "restated": null,
              "value_musd": 38.4,
              "yoy_pct": -3.8
            },
            {
              "end": "2025-06-30",
              "filed": "2025-08-07",
              "restated": null,
              "value_musd": 39.8,
              "yoy_pct": 10.4
            }
          ]
        },
        "gross_margin": {
          "status": "ok",
          "quarters": [
            {
              "end": "2026-09-30",
              "filed": "2026-11-05",
              "restated": null,
              "pct": 33.2
            },
            {
              "end": "2026-06-30",
              "filed": "2026-08-06",
              "restated": null,
              "pct": 32.4
            },
            {
              "end": "2026-03-31",
              "filed": "2026-05-08",
              "restated": null,
              "pct": 34.5
            },
            {
              "end": "2025-12-31",
              "filed": "2026-02-25",
              "restated": null,
              "pct": 37.1
            },
            {
              "end": "2025-09-30",
              "filed": "2025-11-06",
              "restated": null,
              "pct": 41.4
            },
            {
              "end": "2025-06-30",
              "filed": "2025-08-07",
              "restated": null,
              "pct": 36.9
            }
          ]
        },
        "operating_margin": {
          "status": "ok",
          "quarters": [
            {
              "end": "2026-09-30",
              "filed": "2026-11-05",
              "restated": null,
              "pct": -91.2
            },
            {
              "end": "2026-06-30",
              "filed": "2026-08-06",
              "restated": null,
              "pct": -114.4
            },
            {
              "end": "2026-03-31",
              "filed": "2026-05-08",
              "restated": null,
              "pct": -22.5
            },
            {
              "end": "2025-12-31",
              "filed": "2026-02-25",
              "restated": null,
              "pct": -92.3
            },
            {
              "end": "2025-09-30",
              "filed": "2025-11-06",
              "restated": null,
              "pct": -101.1
            },
            {
              "end": "2025-06-30",
              "filed": "2025-08-07",
              "restated": null,
              "pct": -112.8
            }
          ]
        },
        "pretax_income": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-05",
          "value_musd": -37.6
        },
        "net_income": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-05",
          "four_quarters_end": "2026-09-30",
          "value_musd": -37.8,
          "four_quarters_musd": -131.2
        },
        "operating_cash_flow": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-05",
          "first_end": "2025-12-31",
          "value_musd": -136.9
        },
        "capital_spending": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-05",
          "first_end": "2025-12-31",
          "value_musd": 6.4
        },
        "free_cash_flow": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-05",
          "first_end": "2025-12-31",
          "value_musd": -143.4
        },
        "diluted_share_change": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-05",
          "base_end": "2025-09-30",
          "pct": 3.5
        },
        "cash": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-05",
          "value_musd": 199.4
        },
        "debt": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-05",
          "value_musd": 643.1,
          "composition": "convertible debt"
        },
        "net_cash": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-05",
          "value_musd": -443.6
        },
        "deferred_revenue": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-05",
          "value_musd": 21.6,
          "yoy_pct": 5.5
        },
        "backlog": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-05",
          "value_musd": 43.8,
          "yoy_pct": -10.1
        },
        "receivables": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-05",
          "value_musd": 38.3
        },
        "inventory": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-05",
          "value_musd": 60.3
        },
        "equity": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-05",
          "value_musd": -61.4
        },
        "market_value": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-10-31",
          "basis_filed": "2026-11-05",
          "value_musd": 613.3
        },
        "enterprise_value": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-10-31",
          "basis_filed": "2026-11-05",
          "value_musd": 1057
        },
        "ev_sales": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-10-31",
          "basis_filed": "2026-11-05",
          "multiple": 6.5
        },
        "ev_ebit": {
          "status": "not meaningful"
        },
        "pe": {
          "status": "not meaningful"
        },
        "pb": {
          "status": "not meaningful"
        },
        "fcf_yield": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-10-31",
          "basis_filed": "2026-11-05",
          "pct": -23.4
        }
      }
    },
    "short_interest": {
      "status": "ok",
      "settlement": "2026-10-15",
      "published": "2026-10-26",
      "short_pct_of_outstanding": 15,
      "days_to_cover": 2.2,
      "change_pct": -0.6
    },
    "insiders": {
      "status": "ok",
      "as_of": "2026-11-15",
      "windows": [
        {
          "days": 90,
          "status": "ok",
          "from": "2026-08-18",
          "bought_usd": 0,
          "sold_usd": 2056921.02,
          "bought_unpriced": 0,
          "sold_unpriced": 0
        },
        {
          "days": 365,
          "status": "ok",
          "from": "2025-11-16",
          "bought_usd": 0,
          "sold_usd": 3370095.33,
          "bought_unpriced": 0,
          "sold_unpriced": 0
        }
      ]
    }
  },
  "body_markdown": "## Current Thesis\n\nPacific Biosciences (PacBio) shares are more likely to lag the S&P 500 over the next three months. The third-quarter (Q3) 2026 report on 2026-11-04 showed modest revenue growth, a lower gross margin and a cut to the top of the full-year guide. Six days later the company set up a $100M at-the-market (ATM) stock sale program. The fourth-quarter report, expected in late February 2027, shows whether margin and consumable sales recover.\n\nThe rating is Low because the Q3 numbers did not match the three-month rally. Q3 revenue was $40.6M against $38.4M a year earlier, and generally accepted accounting principles (GAAP) gross margin fell to 33% from 41% (8-K Exhibit 99.1, 2026-11-04). The ATM agreement with Allen & Company, filed in an 8-K on 2026-11-10, gives the company a way to sell new shares into any rally.\n\nAt $2.09 on 2026-11-11, the shares still hold an 81.7% three-month gain. They trade between Barclays' $2 target and UBS's $2.70 target. The price already reflects October's partnership news. The Q3 report brought a narrower guide rather than faster revenue.\n\n## Bull Case\n\n- **Revenue beat the consensus estimate.** Q3 revenue of $40.564M beat the $40.386M consensus, and adjusted loss per share of $(0.11) beat the $(0.15) estimate, according to news reports of the 2026-11-04 results.\n- **Vega keeps adding new customers.** PacBio placed 35 Vega benchtop systems in Q3 against 32 a year earlier. More than 90% went to new customers (8-K Exhibit 99.1, 2026-11-04).\n- **Restructuring is cutting costs.** GAAP operating expenses fell to $50.5M from $54.8M a year earlier, which the company credits to lower personnel costs. Q3 included $3.0M of restructuring charges (8-K Exhibit 99.1, 2026-11-04).\n- **New chemistry is being adopted.** More than half of Revio consumables revenue came from SPRQ-Nx chemistry in Q3. Two-thirds of the Revio installed base had upgraded software by quarter-end (8-K Exhibit 99.1, 2026-11-04).\n- **AI and population-genomics programs widen demand.** PacBio announced a multi-year collaboration with Verily Health on 2026-10-19 and a TychoBio project covering more than 10,000 samples on 2026-10-06. Sampled won a Department of Veterans Affairs contract worth up to $27.1M on 2026-09-28 that runs on Revio systems.\n- **Two brokers raised targets after the report.** Piper Sandler raised its target to $3 with a Neutral rating, and Barclays raised its target to $2 with an Underweight rating, both on 2026-11-05 (news headlines).\n\n## Bear Case\n\n- **Gross margin fell eight points.** GAAP gross margin was 33% in Q3 against 41% a year earlier. Non-GAAP gross margin was 36% against 42%. The company blamed higher memory costs and Vega manufacturing transition costs (8-K Exhibit 99.1, 2026-11-04).\n- **Consumables and pull-through slipped.** Consumable revenue was $20.8M against $21.3M a year earlier. Annualized Revio pull-through per system fell to about $204,000 from about $236,000 (8-K Exhibit 99.1, 2026-11-04).\n- **The top of the guide was cut.** PacBio narrowed full-year 2026 revenue guidance to $155–160M from $155–165M on 2026-11-04.\n- **Cash is shrinking against large debt.** Cash, equivalents and investments were $199.4M on 2026-09-30, down from $279.5M on 2025-12-31. Convertible senior notes stood at $643.1M net, and stockholders' equity was a $61.4M deficit (8-K Exhibit 99.1, 2026-11-04).\n- **New share supply is now authorized.** PacBio signed a $100M ATM sales agreement with Allen & Company on 2026-11-10, paying up to 3.0% of gross proceeds (8-K, 2026-11-10). The shares closed at $2.09 on 2026-11-11, the lowest close since the report.\n- **The finance chief left after selling stock.** CFO Jim Gibson stepped down on 2026-11-04, and CEO Mark Van Oene became interim CFO (8-K, 2026-11-04). Gibson had exercised 500,000 options at $1.18 and sold 661,815 shares at $3.11 on 2026-10-06 under a Rule 10b5-1 plan (SEC Form 4, filed 2026-10-08).\n- **UBS cut its target.** UBS lowered its target to $2.70 and kept a Neutral rating on 2026-11-09 (news headlines).\n\n## Setup & Price Structure\n\nThe shares closed at $2.55 on 2026-11-04, before the report. They closed at $2.43 on 2026-11-05, the first session after it, and at $2.09 on 2026-11-11, the session after the ATM agreement was announced. All five closes since the report sit below the pre-report level.\n\nThe last close of $2.09 sits just above the 50-day moving average of $1.98. It is well above the 200-day moving average of $1.61 (both from adjusted daily closes as of 2026-11-11). The 52-week intraday high is $3.44, set on 2026-10-06, and the last close is 39.2% below it. The 52-week closing low is $1.11, set on 2026-08-12.\n\nThe 81.7% three-month gain is measured from the $1.15 close of 2026-08-13. The case turns on two levels. A close under the 50-day average would extend the post-report decline. A recovery through the $2.55 pre-report close would show buyers absorbing the new share supply.\n\n## Catalyst Calendar\n\n- **2026-11-16:** PacBio presents at the Jefferies Global Healthcare Conference. This is the first management appearance after the ATM filing. Comments on ATM usage, cash runway and fourth-quarter gross margin show how much new share supply to expect.\n- **2026-11-18:** PacBio presents at the Stephens NASH26 Conference. Management can update on Vega demand and on converting the Verily and TychoBio programs into consumable revenue, which fell year over year in Q3.\n- **~2027-02-26 (est.):** Q4 and full-year 2026 results. Full-year revenue against the $155–160M guide, GAAP gross margin against Q3's 33%, year-end cash and any ATM sales show whether the business has caught up with the price.\n\n## What Would Change Our Mind\n\nA daily close above $2.90, above every close since the 2026-11-04 report, which would show the shares leading the S&P 500; or full-year 2026 revenue above $160M, the top of the narrowed guide.\n\n## Correlation Notes\n\nPacBio trades with small-cap life-science tools and genomics names. Its largest moves have come on company announcements, broker actions and financing news. StockStory counted 87 single-session moves larger than 5% over the year to 2026-10-05. Illumina and Oxford Nanopore compete directly in long-read and methylation sequencing. PacBio sold its short-read assets to Illumina in February 2026 for $48.1M in net cash proceeds. Memory-chip prices now affect PacBio's gross margin, because the company cited higher memory costs in its Q3 2026 margin decline.",
  "first_seen": "2026-11-10",
  "last_analyzed": "2026-11-12T03:48:20+00:00",
  "last_synthesized": "2026-11-12",
  "date_modified": "2026-11-12",
  "license": "Content © FrontierPicks. Cite the canonical URL."
}