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Here's Why You Should Hold on to Illumina (ILMN) Stock for Now
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Illumina, Inc. (ILMN - Free Report) has been gaining from sequential segmental growth. The company’s focus on partnerships and greater market adoption of its products is expected to contribute further. However, stiff competition and a tough funding environment remain concerns.
Over the past year, the Zacks Rank #2 (Buy) stock has gained 18.3% versus the industry’s fall of 7.6% and the S&P 500’s 49.5% rise.
The renowned life sciences company — which has a market capitalization of $55.55 billion — provides tools, and integrated systems for analysis of genetic variation and function. Illumina projects 7% growth over the next five years and expects to maintain segmental performance. It surpassed estimates in three of the trailing four quarters and missed the same once, with the average earnings surprise being 14.60%.
Let’s delve deeper.
Strong Q1 Results: Illumina’s impressive first-quarter 2021 results, along with gradually improving business conditions, instil investor confidence in the stock. Sequential improvement in segmental revenues across most geographies looks impressive as well. Strong microarrays revenues are also encouraging. Additionally, robust adoption of NovaSeq 6000 v1.5 reagents to enhance deeper genomic discoveries is appreciable.
Strategic Partnerships: Illumina’s expansion strategy also buoys optimism. The company, in April, entered into a partnership with Kartos Therapeutics to co-develop a TP53 companion diagnostic based on the content of Illumina’s comprehensive genomic-profiling assay, TruSight Oncology 500. Illumina, along with its strategic partner R-Pharm, received medical device registration in Russia for Illumina NextSeq 550Dx platform and associated reagent kits in March.
Notable partnerships in January include the ones with renowned investment firm, Sequoia Capital China, and renowned population genomics company, Helix.
Greater Market Adoption: We are upbeat about robust adoption of Illumina’s products amid the pandemic. Illumina registered continued strong market adoption of its NextSeq 1000 and 2000 platforms, and NextSeq 550 system. New NextSeq 550 placements were driven by continued adoption by the company’s clinical customers. In China, the NextSeq Dx instrument (which received NMPA approval) continues to witness strong customer adoption in the hospital setting.
Further, the company continues to enjoy strong customer demand for its NovaSeq units. Strength in sequencing consumable revenues was driven by strong demand for NovaSeq v1.5 reagents and growth in clinical markets.
Downsides
Stiff Competition: Illumina operates in a highly competitive market, with several biggies already enjoying significant market share, intellectual property portfolios and favorable regulatory developments. To gain a competitive edge, Illumina must upgrade its organization and infrastructure appropriately, as well as develop products with superior throughput, cost and accuracy.
Tough Funding Environment: The timing and amount of Illumina’s revenues from customers that rely on government and academic research funding may vary significantly due to various factors, leading to significant uncertainty concerning government and academic research funding worldwide. Budgetary pressures may further result in reduced allocations to government agencies that fund research and development activities. Any shift in the funding of life sciences research and development, or delays surrounding the approval of government budget proposals, may cause Illumina's customers to delay or forego product purchases.
Estimate Trend
Illumina has been witnessing a positive estimate revision trend for 2021. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved 15.3% north to $6.04.
The Zacks Consensus Estimate for second-quarter 2021 revenues is pegged at $1.01 billion, suggesting an improvement of 58.9% from the year-ago reported number.
Other Key Picks
A few other top-ranked stocks from the broader medical space are Amedisys, Inc. (AMED - Free Report) , Boston Scientific Corporation (BSX - Free Report) and National Vision Holdings, Inc. (EYE - Free Report) .
Boston Scientific’s long-term earnings growth rate is estimated at 9.3%. It currently carries a Zacks Rank #2.
National Vision’s long-term earnings growth rate is estimated at 11.8%. It currently sports a Zacks Rank #1.
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Here's Why You Should Hold on to Illumina (ILMN) Stock for Now
Illumina, Inc. (ILMN - Free Report) has been gaining from sequential segmental growth. The company’s focus on partnerships and greater market adoption of its products is expected to contribute further. However, stiff competition and a tough funding environment remain concerns.
Over the past year, the Zacks Rank #2 (Buy) stock has gained 18.3% versus the industry’s fall of 7.6% and the S&P 500’s 49.5% rise.
The renowned life sciences company — which has a market capitalization of $55.55 billion — provides tools, and integrated systems for analysis of genetic variation and function. Illumina projects 7% growth over the next five years and expects to maintain segmental performance. It surpassed estimates in three of the trailing four quarters and missed the same once, with the average earnings surprise being 14.60%.
Let’s delve deeper.
Strong Q1 Results: Illumina’s impressive first-quarter 2021 results, along with gradually improving business conditions, instil investor confidence in the stock. Sequential improvement in segmental revenues across most geographies looks impressive as well. Strong microarrays revenues are also encouraging. Additionally, robust adoption of NovaSeq 6000 v1.5 reagents to enhance deeper genomic discoveries is appreciable.
Strategic Partnerships: Illumina’s expansion strategy also buoys optimism. The company, in April, entered into a partnership with Kartos Therapeutics to co-develop a TP53 companion diagnostic based on the content of Illumina’s comprehensive genomic-profiling assay, TruSight Oncology 500. Illumina, along with its strategic partner R-Pharm, received medical device registration in Russia for Illumina NextSeq 550Dx platform and associated reagent kits in March.
Notable partnerships in January include the ones with renowned investment firm, Sequoia Capital China, and renowned population genomics company, Helix.
Greater Market Adoption: We are upbeat about robust adoption of Illumina’s products amid the pandemic. Illumina registered continued strong market adoption of its NextSeq 1000 and 2000 platforms, and NextSeq 550 system. New NextSeq 550 placements were driven by continued adoption by the company’s clinical customers. In China, the NextSeq Dx instrument (which received NMPA approval) continues to witness strong customer adoption in the hospital setting.
Further, the company continues to enjoy strong customer demand for its NovaSeq units. Strength in sequencing consumable revenues was driven by strong demand for NovaSeq v1.5 reagents and growth in clinical markets.
Downsides
Stiff Competition: Illumina operates in a highly competitive market, with several biggies already enjoying significant market share, intellectual property portfolios and favorable regulatory developments. To gain a competitive edge, Illumina must upgrade its organization and infrastructure appropriately, as well as develop products with superior throughput, cost and accuracy.
Tough Funding Environment: The timing and amount of Illumina’s revenues from customers that rely on government and academic research funding may vary significantly due to various factors, leading to significant uncertainty concerning government and academic research funding worldwide. Budgetary pressures may further result in reduced allocations to government agencies that fund research and development activities. Any shift in the funding of life sciences research and development, or delays surrounding the approval of government budget proposals, may cause Illumina's customers to delay or forego product purchases.
Estimate Trend
Illumina has been witnessing a positive estimate revision trend for 2021. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved 15.3% north to $6.04.
The Zacks Consensus Estimate for second-quarter 2021 revenues is pegged at $1.01 billion, suggesting an improvement of 58.9% from the year-ago reported number.
Other Key Picks
A few other top-ranked stocks from the broader medical space are Amedisys, Inc. (AMED - Free Report) , Boston Scientific Corporation (BSX - Free Report) and National Vision Holdings, Inc. (EYE - Free Report) .
Amedisys’ long-term earnings growth rate is estimated at 12%. The company presently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Boston Scientific’s long-term earnings growth rate is estimated at 9.3%. It currently carries a Zacks Rank #2.
National Vision’s long-term earnings growth rate is estimated at 11.8%. It currently sports a Zacks Rank #1.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
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