(Reuters) – Bio-Rad Laboratories cut its annual revenue growth forecast on Thursday, dragged down by weak demand for clinical diagnostics products from biotech clients.
Shares of the diagnostics company fell 20% after the bell.
Bio-Rad expects its full-year 2024 adjusted revenue to decline by about 2.5% to 4% on a currency-neutral basis, compared to its previous estimate of 1.0% to 2.5%.
“We continue to experience constraints in biotech and biopharma customer spending and, as a result, expect a more modest pace of market recovery than originally anticipated,” said CEO Norman Schwartz.
The company sells laboratory apparatus, instruments, diagnostics to drug manufacturers, biotechs and food testing clients.
Like contract drug manufacturers, suppliers of lab instruments to biotechs have seen sluggish demand as cash-strapped drug developers remain wary of spending amid multi-decade-high interest rates.
The public funding environment for early-stage biotechs is expected to improve in the second half of 2024, on hopes of interest rate cuts from the U.S. Federal Reserve in September.
Some analysts have noted that funding for biotechs could stabilize in near future as a higher number of regulatory approvals was offered to these companies in 2023.
Peer Waters Corp, in July, also lowered annual profit forecast, anticipating lower demand for its products and services used in drug development and research.
Sales from Bio-Rad’s life science unit fell 16.5% to $250.5 million during the quarter, hurt by ongoing weakness in the biotech and biopharma end-markets.
The company reported second-quarter revenue of $638.5 million, missing analysts’ estimate of $645.8 million, according to LSEG data.
On an adjusted basis, Bio-Rad recorded a profit of $3.11 per share in the quarter ended June, above analysts’ estimate of $2.01.
(Reporting by Sruthi Narasimha Chari and Sneha S K in Bengaluru; Editing by Mohammed Safi Shamsi)
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