We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Illumina (ILMN) Posts In-line Earnings in Q1, Margins Down
Read MoreHide Full Article
Illumina Inc. (ILMN - Free Report) reported adjusted earnings per share (EPS) of 64 cents in the first quarter of 2017, which was in line with the Zacks Consensus Estimate and near the upper-end of the company’s guidance range of 60–65 cents. Adjusted earnings, however, lagged the year-ago number by a considerable 9.9%. The quarter’s adjusted EPS was low after adjusting $3.07 per share gain related to deconsolidation of GRAIL.
Including one-time items, the company reported earnings of $2.52 per share compared with 60 cents a year-ago.
Revenues
In the reported quarter, Illumina's revenues grew 4.6% year over year to $598 million, exceeding the company’s expectations of $580–$595 million. Moreover, the top line exceeded the Zacks Consensus Estimate of $591 million by 1.2%.
Per management, the top-line growth in the first quarter can be attributed to a strong uptake of the NovaSeq platform with more than 135 orders placed in this period.
Product revenues (82.1% of total revenue) increased 1.7% year over year to $491 million. Service and Other (17.9%) revenues were up 20.2% year over year at $107 million.
Illumina's adjusted gross margin came in at 63.4%, reflecting a huge contraction of 795 basis points (bps) year over year, owing to NovaSeq introduction, higher array services revenues and product mix within sequencing consumables. Excluding impairment and amortization of acquired intangible assets, and including stock-based compensation expenses, adjusted gross margin was 66.4%, a contraction of 490 bps from the prior-year period.
Research and development expenses were up 16.9% year over year to $145 million and selling, general & administrative expenses rose 8.7% to $163 million. Consequently, the adjusted operating margin of 11.9% reflected a decline of 1155 bps from the year-ago period, primarily due to increased investment in GRAIL and Helix.
Financial Update
Illumina exited the first quarter with cash and cash equivalents and short-term investments of $1.78 billion, up from $1.55 billion in the prior-year quarter. The company generated $168 million in cash flow from operations at the end of the first three months of 2017, compared with $99 million a year ago.
2017 Guidance
For 2017, Illumina still expects revenue growth in the range of 10–12%. The company projects adjusted EPS in the band of $3.60–$3.70 (unchanged from earlier guidance). The current Zacks Consensus Estimate for Illumina’s 2017 bottom line is pegged at $3.65, within the guided range. Our revenue expectations for the year remain at $2.65 billion.
For the second quarter of 2017, Illumina projects revenue growth of approximately 7%. The current Zacks Consensus Estimate for second-quarter revenues is pegged at $641.9 million. The company expects adjusted EPS in the range of 65–70 cents. However, the Zacks Consensus Estimate remains stable at 87 cents, much higher than the guidance range.
Our Take
Illumina ended the first quarter on a mixed note with earnings in line with the Zacks Consensus Estimate and revenues beating the mark. While the top line was strong on several new product launches including the VeriSeq NIPT Solution in Europe and successful launch of NovaSeq, with more than 135 instruments ordered in the first quarter, the bottom line was impacted by huge pressure on margins.
Also tough competition continues to act as major deterrents for the company. We are also apprehensive about the issues pertaining to NIH funding which Illumina is witnessing for quite some time now.
We are, however, looking forward to GRAIL, Illumina’s recently developed venture for the cancer screening market. The company has started detailed planning to embark on a large-scale clinical trial in 2017 with the goal of demonstrating a stage shift in diagnosis.
Zacks Rank & Key Picks
Illumina currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the broader Medical space include Inogen, Inc. (INGN - Free Report) , ZELTIQ Aesthetics, Inc. and Hill-Rom Holdings, Inc. . While Inogen and ZELTIQ Aesthetics sport a Zacks Rank #1 (Strong Buy), Hill-Rom carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inogen gained 62% in the last one year, compared with the S&P 500’s gain of 14.0%. The company reported a stellar four-quarter positive average earnings surprise of over 49.08%.
ZELTIQ Aesthetics surged 82.8% in the last one year, compared with the S&P 500’s gain. Its four-quarter average earnings surprise was a positive of 12.30%.
Hill-Rom gained over 33.7% in the past one year, better than the S&P 500 mark. It posted a trailing four-quarter positive average earnings surprise of 3.1%.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Illumina (ILMN) Posts In-line Earnings in Q1, Margins Down
Illumina Inc. (ILMN - Free Report) reported adjusted earnings per share (EPS) of 64 cents in the first quarter of 2017, which was in line with the Zacks Consensus Estimate and near the upper-end of the company’s guidance range of 60–65 cents. Adjusted earnings, however, lagged the year-ago number by a considerable 9.9%. The quarter’s adjusted EPS was low after adjusting $3.07 per share gain related to deconsolidation of GRAIL.
Including one-time items, the company reported earnings of $2.52 per share compared with 60 cents a year-ago.
Revenues
In the reported quarter, Illumina's revenues grew 4.6% year over year to $598 million, exceeding the company’s expectations of $580–$595 million. Moreover, the top line exceeded the Zacks Consensus Estimate of $591 million by 1.2%.
Per management, the top-line growth in the first quarter can be attributed to a strong uptake of the NovaSeq platform with more than 135 orders placed in this period.
Product revenues (82.1% of total revenue) increased 1.7% year over year to $491 million. Service and Other (17.9%) revenues were up 20.2% year over year at $107 million.
Illumina, Inc. Price, Consensus and EPS Surprise
Illumina, Inc. Price, Consensus and EPS Surprise | Illumina, Inc. Quote
Operational Update
Illumina's adjusted gross margin came in at 63.4%, reflecting a huge contraction of 795 basis points (bps) year over year, owing to NovaSeq introduction, higher array services revenues and product mix within sequencing consumables. Excluding impairment and amortization of acquired intangible assets, and including stock-based compensation expenses, adjusted gross margin was 66.4%, a contraction of 490 bps from the prior-year period.
Research and development expenses were up 16.9% year over year to $145 million and selling, general & administrative expenses rose 8.7% to $163 million. Consequently, the adjusted operating margin of 11.9% reflected a decline of 1155 bps from the year-ago period, primarily due to increased investment in GRAIL and Helix.
Financial Update
Illumina exited the first quarter with cash and cash equivalents and short-term investments of $1.78 billion, up from $1.55 billion in the prior-year quarter. The company generated $168 million in cash flow from operations at the end of the first three months of 2017, compared with $99 million a year ago.
2017 Guidance
For 2017, Illumina still expects revenue growth in the range of 10–12%. The company projects adjusted EPS in the band of $3.60–$3.70 (unchanged from earlier guidance). The current Zacks Consensus Estimate for Illumina’s 2017 bottom line is pegged at $3.65, within the guided range. Our revenue expectations for the year remain at $2.65 billion.
For the second quarter of 2017, Illumina projects revenue growth of approximately 7%. The current Zacks Consensus Estimate for second-quarter revenues is pegged at $641.9 million. The company expects adjusted EPS in the range of 65–70 cents. However, the Zacks Consensus Estimate remains stable at 87 cents, much higher than the guidance range.
Our Take
Illumina ended the first quarter on a mixed note with earnings in line with the Zacks Consensus Estimate and revenues beating the mark. While the top line was strong on several new product launches including the VeriSeq NIPT Solution in Europe and successful launch of NovaSeq, with more than 135 instruments ordered in the first quarter, the bottom line was impacted by huge pressure on margins.
Also tough competition continues to act as major deterrents for the company. We are also apprehensive about the issues pertaining to NIH funding which Illumina is witnessing for quite some time now.
We are, however, looking forward to GRAIL, Illumina’s recently developed venture for the cancer screening market. The company has started detailed planning to embark on a large-scale clinical trial in 2017 with the goal of demonstrating a stage shift in diagnosis.
Zacks Rank & Key Picks
Illumina currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the broader Medical space include Inogen, Inc. (INGN - Free Report) , ZELTIQ Aesthetics, Inc. and Hill-Rom Holdings, Inc. . While Inogen and ZELTIQ Aesthetics sport a Zacks Rank #1 (Strong Buy), Hill-Rom carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inogen gained 62% in the last one year, compared with the S&P 500’s gain of 14.0%. The company reported a stellar four-quarter positive average earnings surprise of over 49.08%.
ZELTIQ Aesthetics surged 82.8% in the last one year, compared with the S&P 500’s gain. Its four-quarter average earnings surprise was a positive of 12.30%.
Hill-Rom gained over 33.7% in the past one year, better than the S&P 500 mark. It posted a trailing four-quarter positive average earnings surprise of 3.1%.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>