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Illumina (ILMN) Gains But Lags Market: What You Should Know

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Illumina (ILMN - Free Report) closed at $210.35 in the latest trading session, marking a +1.47% move from the prior day. This move lagged the S&P 500's daily gain of 1.53%. At the same time, the Dow added 1.19%, and the tech-heavy Nasdaq gained 0.14%.

Heading into today, shares of the genetic testing tools company had lost 8.85% over the past month, lagging the Medical sector's loss of 3.31% and the S&P 500's loss of 3.1% in that time.

Investors will be hoping for strength from Illumina as it approaches its next earnings release. On that day, Illumina is projected to report earnings of $0.28 per share, which would represent a year-over-year decline of 80.69%. Our most recent consensus estimate is calling for quarterly revenue of $1.12 billion, up 0.9% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.81 per share and revenue of $4.74 billion, which would represent changes of -52.37% and +4.76%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for Illumina. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 31.42% lower. Illumina is currently a Zacks Rank #5 (Strong Sell).

In terms of valuation, Illumina is currently trading at a Forward P/E ratio of 73.91. For comparison, its industry has an average Forward P/E of 19.47, which means Illumina is trading at a premium to the group.

Investors should also note that ILMN has a PEG ratio of 2.37 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. ILMN's industry had an average PEG ratio of 1.43 as of yesterday's close.

The Medical - Biomedical and Genetics industry is part of the Medical sector. This industry currently has a Zacks Industry Rank of 71, which puts it in the top 29% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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