Expanding Reagent Offerings And Diagnostics Will Widen Platform Adoption

Key Takeaways

• Expansion of reagent offerings and diagnostics partnerships aim to boost revenue growth and improve margins significantly.
  
• Operational efficiencies and strategic collaborations enhance platform utilization, positioning Akoya for sustainable growth and profitability.
  
• Operational challenges in the North American academic market and decreased instrument sales threaten revenue growth and overall financial stability.

Catalysts

A life sciences technology company, provides spatial biology solutions focused on transforming discovery, clinical research, and diagnostics in North America, the Asia-Pacific, Europe, the Middle East, and Africa.

• Akoya's focus on expanding its reagent offerings, like the PhenoCode IO60 panel and 24-plex mouse panel, aims to boost system utilization and increase reagent revenue, positively impacting overall revenue growth and margins.
  
• The company is advancing its pipeline of companion diagnostics, such as its partnership with Acrivon Therapeutics and NeraCare, which could yield significant revenue contributions in the future and positively impact earnings.
  
• The increase in gross margins, due to operational efficiencies and the manufacturing center of excellence, positions Akoya to improve net margins even in a challenging market environment.
  
• Akoya's collaborations with institutions like the Francis Crick Institute on major studies (e.g., MANIFEST) are expected to drive adoption and utilization of its platforms, potentially increasing future revenues.
  
• By actively evaluating strategic alternatives, Akoya is positioned to identify opportunities for sustainable growth and profitability, which could positively impact future earnings and shareholder value.

Akoya Biosciences Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Akoya Biosciences's revenue will grow by 11.4% annually over the next 3 years.
• Analysts are not forecasting that Akoya Biosciences will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Akoya Biosciences's profit margin will increase from -67.8% to the average US Life Sciences industry of 12.9% in 3 years.
• If Akoya Biosciences's profit margin were to converge on the industry average, you could expect earnings to reach $14.6 million (and earnings per share of $0.29) by about April 2028, up from $-55.4 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 14.5x on those 2028 earnings, up from -1.1x today. This future PE is lower than the current PE for the US Life Sciences industry at 33.4x.
• Analysts expect the number of shares outstanding to grow by 0.87% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.63%, as per the Simply Wall St company report.

Akoya Biosciences Future Earnings Per Share Growth

Risks

• Revenue for the third quarter came in below expectations due to ongoing capital equipment purchase constraints in the life sciences tools market, which could impact future revenue growth.
  
• Akoya has reduced its full-year revenue expectations to $80 million to $85 million from a prior range of $96 million to $104 million, indicating potential challenges in maintaining expected revenue and net margins.
  
• The company is facing continued pressure on customer spending, particularly in the North American academic market, impacting revenue and potentially limiting future growth.
  
• Instrument revenue decreased by 53% year-over-year, causing a significant reduction in total revenue, which can adversely affect earnings.
  
• Akoya's reliance on securing funding for continued sales, especially in an environment with extended sales cycles and conversion volatility, could impact their ability to sustain revenue and earnings growth.

Valuation

• The analysts have a consensus price target of $3.14 for Akoya Biosciences based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $5.0, and the most bearish reporting a price target of just $1.8.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $112.8 million, earnings will come to $14.6 million, and it would be trading on a PE ratio of 14.5x, assuming you use a discount rate of 9.6%.
  
• Given the current share price of $1.17, the analyst price target of $3.14 is 62.7% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.