DNA Sequencing: The Next High-Growth Market in Biotech?
Ten years ago, it cost millions of dollars to sequence an entire human genome -- today, it costs between $4,000-$20,000. This technology is used to pinpoint patients with genetic pre-dispositions to diseases, allowing preventative measures to save lives. The rate of growth in the DNA sequencing market has been impressive, and some think it will only grow from here.
Mark Skousen, editor of Hedge Fund Tracker, recently recommended Illumina on this belief. Illumina is the world's leader of the genetic-testing market, advancing the technology to the point that individuals (in research) can have their genomes mapped for $4,000.
According to Skousen, Illumina offers the industry's fastest data generation rate, and dominates 80% of the market as a result. Regardless of the overall economy, Skousen believes that innovation and efficiency improvements will cause Illumina's earnings to climb. Skousen also sees sales moving "down to hospitals and doctors' offices" as medical DNA testing becomes more commonplace.
Greg Lucier CEO of Life Technologies, another player in the DNA sequencing market, told Bloomberg earlier this summer he expects 20-30% annual growth in the use of genetic scanning machines. He projects the market to grow to $10 billion "in the next few years," from around $1.5-$2 billion today.
"Theoretically, it could be tens of billions," Lucier said. "If every cancer patient in the future is going to get genetically tested on their genome, that's $50 billion right there. It's an enormous market."
We compiled a list of companies with a hand in the DNA sequencing market. Do you think this market and its companies will experience the high growth Lucier and Skousen predict?
Use this list as a starting-off point for your own analysis. (Click here to access free, interactive tools to analyze these ideas.)
1. Illumina (NAS: ILMN) : Biotechnology Industry. Market cap of $6.32B. The stock is a short squeeze candidate, with a short float at 17.14% (equivalent to 10.17 days of average volume). The stock is currently stuck in a downtrend, trading 19.64% below its SMA20, 30.24% below its SMA50, and 29.63% below its SMA200. The stock has performed poorly over the last month, losing 28.88%.
2. Life Technologies (NAS: LIFE) : Biotechnology Industry. Market cap of $7.04B. The stock is currently stuck in a downtrend, trading 16.06% below its SMA20, 24.41% below its SMA50, and 29.89% below its SMA200. The stock has performed poorly over the last month, losing 21.92%.
3. Pacific Biosciences of California (NAS: PACB) : Biotechnology Industry. Market cap of $316.25M. The stock is a short squeeze candidate, with a short float at 8.29% (equivalent to 10.83 days of average volume). The stock has had a couple of great days, gaining 9.43% over the last week.
4. Fluidigm (NAS: FLDM) : Scientific & Technical Instruments Industry. Market cap of $268.87M. The stock is currently stuck in a downtrend, trading 21.48% below its SMA20, 20.82% below its SMA50, and 16.59% below its SMA200. It's been a rough couple of days for the stock, losing 6.98% over the last week.
5. Complete Genomics (NAS: GNOM) : Biotechnology Industry. Market cap of $276.25M. The stock is a short squeeze candidate, with a short float at 6.58% (equivalent to 5.3 days of average volume). The stock is currently stuck in a downtrend, trading 25.14% below its SMA20, 40.75% below its SMA50, and 25.79% below its SMA200. The stock has performed poorly over the last month, losing 44.04%.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Alexander Crawford does not own any of the shares mentioned above. Data sourced from Finviz.
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