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Here's Why You Should Invest in Illumina (ILMN) Stock Now

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Illumina, Inc. (ILMN - Free Report) has been gaining investor confidence on consistently positive results. Over the past year, the company’s share price has outperformed its industry. The stock has gained 54.2% against the industry’s 8.5% fall. Also, the company has outperformed the S&P 500’s 13.2% gain.

This renowned sequencing and array-based genetic analysis solution provider has a market cap of $39.64 billion. The company has an earnings growth rate of 20% for the next three to five years.

With solid prospects, this Zacks Rank #1 (Strong Buy) stock is an attractive pick for investors at the moment. 

The company’s estimate revision trend for the current year has been positive. In the past 60 days, 10 analysts revised their estimates upward with no movement in the opposite direction. Resultantly, earnings estimates rose around 5.4% to $4.84.

 

Let’s find out whether the recent positive trend is a sustainable one.

Solid Quarterly Performance

Illumina exited the first quarter of 2018 on a solid note with better-than-expected earnings and revenues. We are also encouraged by the significant year-over-year growth on both the counts. The substantial upside can be attributed to strong consumables growth across Illumina’s sequencing portfolio.

New Products Bode Well

We are upbeat about Illumina’s product launches which continue to contribute to the top line. Management is hopeful about the recently-launched NovaSeq S1 flow cell reagent kit. The company also received product approval certificate for the NextSeq 550Dx instrument from the Ministry of Food and Drug Safety (MFDS) in South Korea.

Last November, Illumina introduced NextSeq 550Dx instrument as well. This is the company’s second FDA-regulated and CE-IVD marked next-generation sequencing (NGS) system.

Efforts to Grow in Oncology Space

llumina’s collaborations with Bristol-Myers Squibb and Loxo Oncology in the field of clinical oncology applications are expected to garner positive results. The alliance with Bristol-Myers Squibb will utilize Illumina’s NGS technology to develop and globally commercialize in-vitro diagnostic (IVD) assays in support of Bristol-Myers Squibb’s oncology portfolio.

We also look forward to GRAIL, Illumina’s recently-developed company focused on the cancer screening market. We believe GRAIL is expected to significantly expand Illumina’s share in the multi-billion dollar oncology market.

Geographic Expansion

Apart from North America, Illumina markets and distributes products directly to customers in Europe, Latin America, and the Asia-Pacific (APAC) region either through its direct selling force or through distributors that specialize in life science products.

In the first quarter, Illumina witnessed 21% growth in the APAC region propelled by 38% shipment growth in Greater China. Obviously, among the emerging markets, China is currently the most favorable space for Illumina’s business.

In recent times, management has noticed a considerable increase in demand as customers attempt to set up NIPT operations in China. We believe this recent progress in China will open up avenues for Illumina, thereby enhancing business growth.

Other Key Picks

Other top-ranked stocks in the broader medical sector are Intuitive Surgical (ISRG - Free Report) , Chemed Corporation (CHE - Free Report) and Amedisys, Inc. (AMED - Free Report) . While Intuitive Surgical and Chemed sport a Zacks Rank #1, Amedisys carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuitive Surgical has a long-term expected earnings growth rate of 12.1%.

Chemed has a long-term expected earnings growth rate of 10%.

Amedisys has a long-term expected earnings growth rate of 17.5%.

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