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Illumina (ILMN) Oncology Growth Aids Amid GRAIL Merger Hurdle
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Illumina, Inc.’s (ILMN - Free Report) market opportunities continue to expand owing to accelerated demand from clinical and translational customers. However, government budget cuts, including NIH funding issues, and competition act as major downsides. Illumina currently carries a Zacks Rank #3 (Hold).
In the past six months, Illumina has outperformed its industry. The stock has gained 5.4% against the industry's 0.8% fall. Illumina exited the second quarter of 2021 with better-than-expected results. The year-over-year robust improvement in segmental revenues across all geographies significantly exceeded the company’s expectations. In clinical markets, oncology, reproductive health and genetic disease testing are expanding as reimbursement coverage increases, patient awareness grows and more sequencing applications enter the clinic.
Ramping up of population sequencing programs is contributing to robust growth within the research business. The raised 2021 guidance is encouraging too, indicating that this bullish trend will continue through the rest of the year. The solid long-term growth potential in the oncology space and worldwide expansion to drive growth also buoy optimism. A strong capital structure is an added plus.
Illumina has been making progress outside the United States to ensure all expecting families have access to NIPT. In Germany, national coverage will be implemented in 2022. Additionally, the company is seeing continued growth from the CE-IVD marked VeriSeq NIPT solution in Europe and Asia.
In June 2021, Illumina collaborated with Next Generation Genomic (NGG Thailand) to launch VeriSeq NIPT Solution v2, a CE-IVD, next-generation sequencing (NGS)-based approach to noninvasive prenatal testing (NIPT) in Thailand. The partnership will provide Illumina with wider patient access under next-generation sequencing for NIPT.
So far in 2021, Illumina has derived benefits from the cascading effect of the ACOG guidance on increasing coverage of NIPT for all pregnancies. This led the company’s reproductive health business to register the third consecutive quarter of both year-over-year and sequential growth. Illumina, in partnership with Harvard Pilgrim Health Care, published favorable economic study results in March. This study demonstrated the cost-effectiveness of offering NIPT to pregnant women.
On the flip side, during the second quarter, Illumina’s research and development expenses increased 30.3% year over year to $202 million, whereas selling, general & administrative expenses rose 133.3% to $413 million. These pushed up operating costs by 85.2% to $615 million. These escalating costs are building pressure on the bottom line.
Further, due to a lack of clarity related to the resurgence of coronavirus and emergence of the Delta strain, the company had to be conservative in terms of its second-half 2021 business growth expectation related. The GRAIL acquisition-related complications are weighing on the stock.
Image: Bigstock
Illumina (ILMN) Oncology Growth Aids Amid GRAIL Merger Hurdle
Illumina, Inc.’s (ILMN - Free Report) market opportunities continue to expand owing to accelerated demand from clinical and translational customers. However, government budget cuts, including NIH funding issues, and competition act as major downsides. Illumina currently carries a Zacks Rank #3 (Hold).
In the past six months, Illumina has outperformed its industry. The stock has gained 5.4% against the industry's 0.8% fall. Illumina exited the second quarter of 2021 with better-than-expected results. The year-over-year robust improvement in segmental revenues across all geographies significantly exceeded the company’s expectations. In clinical markets, oncology, reproductive health and genetic disease testing are expanding as reimbursement coverage increases, patient awareness grows and more sequencing applications enter the clinic.
Ramping up of population sequencing programs is contributing to robust growth within the research business. The raised 2021 guidance is encouraging too, indicating that this bullish trend will continue through the rest of the year. The solid long-term growth potential in the oncology space and worldwide expansion to drive growth also buoy optimism. A strong capital structure is an added plus.
Illumina has been making progress outside the United States to ensure all expecting families have access to NIPT. In Germany, national coverage will be implemented in 2022. Additionally, the company is seeing continued growth from the CE-IVD marked VeriSeq NIPT solution in Europe and Asia.
Illumina, Inc. Price and Consensus
Illumina, Inc. price-consensus-chart | Illumina, Inc. Quote
In June 2021, Illumina collaborated with Next Generation Genomic (NGG Thailand) to launch VeriSeq NIPT Solution v2, a CE-IVD, next-generation sequencing (NGS)-based approach to noninvasive prenatal testing (NIPT) in Thailand. The partnership will provide Illumina with wider patient access under next-generation sequencing for NIPT.
So far in 2021, Illumina has derived benefits from the cascading effect of the ACOG guidance on increasing coverage of NIPT for all pregnancies. This led the company’s reproductive health business to register the third consecutive quarter of both year-over-year and sequential growth. Illumina, in partnership with Harvard Pilgrim Health Care, published favorable economic study results in March. This study demonstrated the cost-effectiveness of offering NIPT to pregnant women.
On the flip side, during the second quarter, Illumina’s research and development expenses increased 30.3% year over year to $202 million, whereas selling, general & administrative expenses rose 133.3% to $413 million. These pushed up operating costs by 85.2% to $615 million. These escalating costs are building pressure on the bottom line.
Further, due to a lack of clarity related to the resurgence of coronavirus and emergence of the Delta strain, the company had to be conservative in terms of its second-half 2021 business growth expectation related. The GRAIL acquisition-related complications are weighing on the stock.
Key Picks
A few better-ranked stocks from the Medical-Instruments industry include Semler Scientific Inc. , ALCON INC (ALC - Free Report) and IDEXX Laboratories, Inc. (IDXX - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Semler Scientific has a long-term earnings growth rate of 25%.
ALCON has a long-term earnings growth rate of 17.7%.
IDEXX has a long-term earnings growth rate of 19.9%.