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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 52.9% against the industry’s 19.5% fall. Also, the company has outperformed the S&P 500’s 4.7% gain.

This renowned sequencing and array-based genetic analysis solution provider has a market cap of $45.31 billion. The company has an earnings growth rate of 23.4% for the next three to five years.

With solid prospects, this Zacks Rank #2 (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, nine analysts revised their estimates upward with no movement in the opposite direction. Resultantly, earnings estimates rose around 5.3% to $5.75.

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

Solid Quarterly Performance

Illumina exited the third 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 in both the counts. Additionally, improving margins buoy optimism. Further, the company’s raised 2018 adjusted earnings per share guidance indicates that the company will deliver solid results in the quarter to come.

Pacific Biosciences Acquisition Deal

We are upbeat about Illumina signing an acquisition agreement to buy fellow genomics company, Pacific Biosciences of California, Inc. (PACB - Free Report) . Per Illumina, this buyout will complement its sequencing solutions portfolio. Currently, the company’s short-read platform addresses most sequencing applications. The addition of Pacific Biosciences' long-read platform will help the company better deal with select applications such as de novo sequencing and sequencing of highly homologous regions of genomes.

Furthermore, Pacific Biosciences recently announced new enhancements to its flagship DNA-sequencing platform — the Sequel System. The features include a new version (6.0) of its software, new consumable reagents (3.0) and the latest SMRT Cell (1M v3). Per Illumina, this, when added with its infrastructure, will help expand clinical insights and biological discoveries.

Geographic Expansion Efforts Bode Well

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

In the third quarter, Illumina witnessed impressive growth in the Asia-Pacific region propelled by 17% shipment growth in Greater China. Obviously, among the emerging markets, China currently offers the maximum scope for growth to Illumina. Also, revenues from Europe, Middle East and Africa have risen strongly.

Other Key Picks

Other top-ranked stocks in the broader medical space are Stryker Corporation (SYK - Free Report) and Masimo Corporation (MASI - Free Report) .

Stryker has a long-term expected earnings growth rate of 10% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Masimo’s long-term earnings growth rate is projected at 14.6%. The stock carries a Zacks Rank #2.

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