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Bull of the Day: Illumina (ILMN)

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Illumina Inc. (ILMN - Free Report) is a medical company that focuses on DNA sequencing and array-based technologies; they serve their customers in the research, clinical, and applied markets. Illumina’s products are used throughout life sciences, oncology, reproductive health, agriculture, and other emerging segments.

Shares Rally on Q2 Results

Just a few days ago, Illumina, which sits at a #1 (Strong Buy) on the Zacks Rank, posted great second quarter numbers across the board. Shares rallied over 7% as a result, suggesting the market was impressed by the medical stock’s performance.

Both its top and bottom line easily beat the Zacks Consensus Estimate, with revenues surging 25% year-over-year.

Cash flow from operations hit $295 million, while free cash flow was $218 million for the quarter.

Research and development (R&D) expenses for Q2 were $151 million compared to $130 million in the prior year period. As a percentage of revenues, non-GAAP R&D expenses were 18.2%.

Additionally, sequencing consumables, array consumables, and lab and other services each grew over 30% in comparison to Q2 2017.

ILMN now expects revenue growth of roughly 20% for the fiscal year and non-GAAP EPS between $5.35 to $5.45.

Strong Earnings Outlook

For ILMN, its bottom line is trending upward for the foreseeable future.

Earnings are expected to grow about 7% for the current quarter, and three analysts have revised their estimates higher over the past two months compared to none lower.

Current fiscal year figures are looking pretty good, with two upwards estimates in the last 60 days. The Zacks Consensus estimate trend has jumped five cents from $4.86 per share to $4.91 per share.

Next year is looking solid as well, with earnings expected to grow over 17%; the consensus has increased 17 cents in the past two months.

What’s Next for ILMN?

Shares of Illumina have gained more than 85% in the past one-year period and have increased about 48% year-to-date. In comparison, the S&P 500 has gained 14% in the same time period and 5.3%, respectively.

Illumina, Inc. Price and Consensus

Illumina, Inc. Price and Consensus | Illumina, Inc. Quote

Its industry, Medical—Biomedical and Genetics, has lost about 1.1% year-to-date, but the group sits in the top 40% of all industries ranked by the Zacks Industry Rank. ILMN, though, is one of the top performers, especially when compared to industry peers like Sangamo Therapeutics SGMO and Biohaven Pharmaceutical BHVN.

Taking into account its impressive industry standing, as well as its expected earnings growth, Illumina could be an exciting opportunity for investors looking to get in to the broader medical space right now.

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