Simoa ONE Platform Will Revitalize Immunology And Oncology Markets

Key Takeaways

• Strategic product expansion and key acquisitions could significantly enhance market reach and revenue potential in immunology and oncology markets.
  
• Focus on diagnostics and recurring revenue streams is likely to improve profitability and operational efficiency, paving the way to positive cash flow.
  
• Dependence on pharma contracts, shift to new consumables, and possible acquisition woes threaten Quanterix’s financial stability and growth.

Catalysts

A life sciences company, engages in development and marketing of digital immunoassay platforms that advances precision health for life sciences research and diagnostics in North America, Europe, the Middle East, Africa, and the Asia Pacific regions.

• Quanterix is expanding its product lineup with the development of the Simoa ONE platform, expected to launch by the end of 2025. This platform will enhance the company's offerings in the immunology and oncology markets, potentially increasing future revenue streams.
  
• The recent merger agreement to acquire Akoya Biosciences is anticipated to expand Quanterix's addressable market significantly from $11 billion to $20 billion. The merger is expected to offer revenue synergies by combining Quanterix's and Akoya's platforms, potentially boosting future top-line growth.
  
• The company's focus on diagnostics, particularly in Alzheimer's disease, is highlighted by the launch of the LucentAD test and expansion of partnerships with hospitals and reference labs. This strategic move into diagnostics is expected to create a new avenue for revenue generation.
  
• Quanterix's strategy to increase recurring revenues is evidenced by the shift from 65% to 80% in recurring revenue over the past two years. The continued expansion of consumables and services could positively impact future net margins and earnings.
  
• The anticipated realization of $40 million in operating synergies by 2026 from the Akoya acquisition, combined with its cost containment strategies, is expected to enhance operational efficiency and accelerate the company’s trajectory toward positive free cash flow, ultimately improving profitability.

Quanterix Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Quanterix's revenue will grow by 10.8% annually over the next 3 years.
• Analysts are not forecasting that Quanterix will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Quanterix's profit margin will increase from -35.3% to the average US Life Sciences industry of 13.8% in 3 years.
• If Quanterix's profit margin were to converge on the industry average, you could expect earnings to reach $25.4 million (and earnings per share of $0.63) by about July 2028, up from $-47.9 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 21.3x on those 2028 earnings, up from -4.5x today. This future PE is lower than the current PE for the US Life Sciences industry at 36.0x.
• Analysts expect the number of shares outstanding to grow by 1.12% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.12%, as per the Simply Wall St company report.

Quanterix Future Earnings Per Share Growth

Risks

• The academic market is experiencing confusion and decision-making paralysis, which could delay funding and impact U.S. academic market revenues negatively by approximately 250 basis points in 2025. This could affect revenue growth dependent on this segment.
  
• Instrument revenue saw a 33% decline in 2024, and with capital constraints in the market, recovery in this segment may be slow, further impacting revenue growth if the trend continues.
  
• The transition to new consumables (Advantage PLUS assays) is estimated at only 50% complete, and potential delays or issues in transitioning could impact revenue stabilization in the consumable segment, which previously showed flat revenue growth.
  
• The reliance on large projects from pharma, particularly in the Accelerator Lab, shows a dependency on a few significant contracts. Any timing or demand issues, especially as observed in large pharma projects in the first half of 2025, could lead to revenue volatility.
  
• The planned acquisition of Akoya Biosciences includes expectations of $40 million in cost synergies by 2026, but should these not materialize, it could delay the anticipated acceleration of scale and profitability, impacting EBIT margins and cash flow projections.

Valuation

• The analysts have a consensus price target of $11.0 for Quanterix 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 $18.0, and the most bearish reporting a price target of just $7.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $184.6 million, earnings will come to $25.4 million, and it would be trading on a PE ratio of 21.3x, assuming you use a discount rate of 7.1%.
• Given the current share price of $5.51, the analyst price target of $11.0 is 49.9% 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.