Gene hunter’s rosier outlook has a downside

(The author is a Breakingviews columnist. The opinions expressed are their own.)

LONDON ( Breakingviews) – Oxford Nanopore Technologies boasts of being at the cutting edge of genome sequencing, which can help predict the future health of patients. The UK life science firm could use the same expertise when it comes to its future financial performance. On Thursday evening, the company raised year-on-year revenue growth guidance on its core Life Science Research Tools arm for 2021 to 60% to 70%, from a previous range of 30% to 40%. The news, which focuses on the part of the group that produces handsets for diagnosis, lifted shares in the 5.3 billion pound company by 14%.

The improved outlook raises questions. Oxford Nanopore only listed on the London Stock Exchange two weeks ago, and published a detailed prospectus outlining its expectations for growth for the coming year. Hence the vast deviation looks odd. The company argues that a wave of new customers in September boosted its performance beyond what it had previously predicted. But like the scientists and doctors that rely on its technology to fight disease, investors may seek more accurate estimates to maintain their confidence in its valuation. (By Aimee Donnellan)

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