We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
ILMN Stock Trading Near 52-Week High: Should You Buy, Sell or Hold?
Read MoreHide Full Article
Shares of Illumina (ILMN - Free Report) have been showcasing impressive market performance, reaching a new 52-week-high of $151.04 during Tuesday’s trading session. The stock finished at $143.52 yesterday, just 5.2% short of its peak.
The surge comes soon after the company's announcement on Oct. 9 of the launch of its MiSeq i100 Series of sequencing systems, an upgrade to the original benchtop MiSeq System from 2011. The new MiSeq i100 and MiSeq i100 Plus Systems offer major technological enhancements, including a reduction in run times and cost-effective consumables to make sequencing affordable. The Series enhances Illumina's XLEAP-SBS (sequencing by synthesis) chemistry by enabling room-temperature storage and shipping for the first time. These advanced sequencers are said to play an integral part in the company’s next era of genomics growth and discovery.
Over the past three months, ILMN shares have rallied 25.3%, outperforming the industry’s growth of 2.8% and the S&P 500 composite’s 6% rise. The company has surpassed its industry peers Qiagen (QGEN - Free Report) and Pacific Biosciences of California, Inc. (PACB - Free Report) in the same time frame.
Three-Month Price Performance
Image Source: Zacks Investment Research
From a technical perspective, Illumina shares have been trading above the 90 and 200-day SMA (Simple Moving Average), suggesting a bullish long-term trend.
ILMN Stock Above 90 & 200-Day SMA
Image Source: Zacks Investment Research
Let’s dive into some key factors that are supporting this positive momentum.
GRAIL Divestment
Investors have finally heaved a sigh of relief following Illumina’s completion of the GRAIL spin-off, marking the end of three-year-long regulatory hassles. Shortly after the successful spin-off, the Federal Trade Commission dismissed the case against Illumina and GRAIL, bringing the U.S. proceedings to a close. The European Court of Justice ruled last month that the European Commission did not have jurisdiction over Illumina's acquisition of GRAIL. Illumina is now increasing its focus on advancing the genomics strategy, aiming to significantly accelerate its core revenue growth by 2027.
Expanding Installed Base
To drive top-line growth, Illumina is boosting its installed base and helping customers maximize the potential of its instruments. The ongoing transition of sequencing activity from NovaSeq 6000 to NovaSeq X Plus is driving up the demand for consumables, which account for a majority of the company’s revenues. As of the last reported second quarter of 2024, there were 469 NovaSeq X Plus installations, each generating more than $1 million in revenues, on average. The launch of the technology to the mid-throughput NextSeq 1000/2000 instruments has received remarkable customer feedback.
Operational Discipline
Earlier this year, Illumina launched a portfolio optimization strategy to boost productivity across its supply chain. As part of it, the company has identified several products for rationalization to concentrate on those that are more profitable. To streamline operations, Illumina combined its marketing and commercial teams into one global function, which is set to drive more sustained growth and margins over time by effectively serving customers. These efforts contributed to a 240-basis point improvement in Core Illumina’s Q2 gross margin, reflecting reduced costs and enhanced productivity. The company is on track toward achieving greater operating leverage this year.
ILMN’s Future Prospects High
After wrapping up the GRAIL chapter, Illumina is entering a new phase of growth focused on its core genomic portfolio. Over the next three years, the company plans to introduce groundbreaking innovations aimed at redefining the genome and driving deeper biological insights through multiomics. To simplify NGS operations in labs, Illumina is working on sample-to-insight workflow solutions, including top-tier software and informatics capabilities.
The company’s multiomics growth strategy has been bolstered by the recent acquisition of Fluent BioSciences. A new research partnership with the Broad Institute of MIT and Harvard will leverage Fluent technology to advance single-cell sequencing — one of the rapidly advancing areas in biology. Together, these strategic initiatives are set to accelerate its revenue growth by 2027 and drive strong diluted earnings per share (EPS) growth through operational efficiencies, and a systematic and disciplined approach to free cash flow allocation.
Illumina’s flagship oncology products are now supported on the NovaSeq X Series, enabling comprehensive genomic profiling at a greater scale and lower overall costs. The FDA approval of its cancer biomarker test, TruSight Oncology Comprehensive, and first two companion diagnostic (CDx) indications will facilitate quicker matching between patients and targeted therapies.
Current Roadblocks for Illumina
Illumina is navigating a challenging landscape in China, showing a weak trend of performance over the last seven to eight quarters. In the second quarter of 2024, revenues in the region plunged nearly 35% due to broader economic headwinds and COVID-19-related disruptions. The company still awaits any meaningful improvement in this important market.
Illumina’s mid-throughput segment is particularly sensitive to the macroeconomic volatilities. With customers being cautious in their spending and cash flows, the sales cycles are also dragging longer than expected. Revenues from sequencing instruments in Core Illumina decreased by a staggering 40% year over year in the second quarter, partly stemming from a decline in mid-throughput shipments and moderate instrument placements.
ILMN Stock Trades Cheap
Boasting a Value score of B, Illumina’s forward 12-month price-to-earnings (P/E) of 33.83X is much lower than the industry average of 98.83X.
P/E Ratio Forward Twelve Months (F12M)
Image Source: Zacks Investment Research
Our Verdict on ILMN
Illumina’s recent achievement of a new yearly high favorably reflects the market’s response to its latest benchtop sequencers. The continued execution of its key priorities, as well as the new roadmap for accelerated revenue and EPS growth through innovation and partnership, also creates optimism. However, a challenging customer backdrop in the mid-throughput business and China’s macroeconomic issues remain a headwind. Those eyeing ILMN, currently carrying a Zacks Rank #3 (Hold), should closely monitor the developments and wait for a better entry point. Existing investors may consider retaining the stock, given its cheaper valuation. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
ILMN Stock Trading Near 52-Week High: Should You Buy, Sell or Hold?
Shares of Illumina (ILMN - Free Report) have been showcasing impressive market performance, reaching a new 52-week-high of $151.04 during Tuesday’s trading session. The stock finished at $143.52 yesterday, just 5.2% short of its peak.
The surge comes soon after the company's announcement on Oct. 9 of the launch of its MiSeq i100 Series of sequencing systems, an upgrade to the original benchtop MiSeq System from 2011. The new MiSeq i100 and MiSeq i100 Plus Systems offer major technological enhancements, including a reduction in run times and cost-effective consumables to make sequencing affordable. The Series enhances Illumina's XLEAP-SBS (sequencing by synthesis) chemistry by enabling room-temperature storage and shipping for the first time. These advanced sequencers are said to play an integral part in the company’s next era of genomics growth and discovery.
Over the past three months, ILMN shares have rallied 25.3%, outperforming the industry’s growth of 2.8% and the S&P 500 composite’s 6% rise. The company has surpassed its industry peers Qiagen (QGEN - Free Report) and Pacific Biosciences of California, Inc. (PACB - Free Report) in the same time frame.
Three-Month Price Performance
Image Source: Zacks Investment Research
From a technical perspective, Illumina shares have been trading above the 90 and 200-day SMA (Simple Moving Average), suggesting a bullish long-term trend.
ILMN Stock Above 90 & 200-Day SMA
Image Source: Zacks Investment Research
Let’s dive into some key factors that are supporting this positive momentum.
GRAIL Divestment
Investors have finally heaved a sigh of relief following Illumina’s completion of the GRAIL spin-off, marking the end of three-year-long regulatory hassles. Shortly after the successful spin-off, the Federal Trade Commission dismissed the case against Illumina and GRAIL, bringing the U.S. proceedings to a close. The European Court of Justice ruled last month that the European Commission did not have jurisdiction over Illumina's acquisition of GRAIL. Illumina is now increasing its focus on advancing the genomics strategy, aiming to significantly accelerate its core revenue growth by 2027.
Expanding Installed Base
To drive top-line growth, Illumina is boosting its installed base and helping customers maximize the potential of its instruments. The ongoing transition of sequencing activity from NovaSeq 6000 to NovaSeq X Plus is driving up the demand for consumables, which account for a majority of the company’s revenues. As of the last reported second quarter of 2024, there were 469 NovaSeq X Plus installations, each generating more than $1 million in revenues, on average. The launch of the technology to the mid-throughput NextSeq 1000/2000 instruments has received remarkable customer feedback.
Operational Discipline
Earlier this year, Illumina launched a portfolio optimization strategy to boost productivity across its supply chain. As part of it, the company has identified several products for rationalization to concentrate on those that are more profitable. To streamline operations, Illumina combined its marketing and commercial teams into one global function, which is set to drive more sustained growth and margins over time by effectively serving customers. These efforts contributed to a 240-basis point improvement in Core Illumina’s Q2 gross margin, reflecting reduced costs and enhanced productivity. The company is on track toward achieving greater operating leverage this year.
ILMN’s Future Prospects High
After wrapping up the GRAIL chapter, Illumina is entering a new phase of growth focused on its core genomic portfolio. Over the next three years, the company plans to introduce groundbreaking innovations aimed at redefining the genome and driving deeper biological insights through multiomics. To simplify NGS operations in labs, Illumina is working on sample-to-insight workflow solutions, including top-tier software and informatics capabilities.
The company’s multiomics growth strategy has been bolstered by the recent acquisition of Fluent BioSciences. A new research partnership with the Broad Institute of MIT and Harvard will leverage Fluent technology to advance single-cell sequencing — one of the rapidly advancing areas in biology. Together, these strategic initiatives are set to accelerate its revenue growth by 2027 and drive strong diluted earnings per share (EPS) growth through operational efficiencies, and a systematic and disciplined approach to free cash flow allocation.
Illumina’s flagship oncology products are now supported on the NovaSeq X Series, enabling comprehensive genomic profiling at a greater scale and lower overall costs. The FDA approval of its cancer biomarker test, TruSight Oncology Comprehensive, and first two companion diagnostic (CDx) indications will facilitate quicker matching between patients and targeted therapies.
Current Roadblocks for Illumina
Illumina is navigating a challenging landscape in China, showing a weak trend of performance over the last seven to eight quarters. In the second quarter of 2024, revenues in the region plunged nearly 35% due to broader economic headwinds and COVID-19-related disruptions. The company still awaits any meaningful improvement in this important market.
Illumina’s mid-throughput segment is particularly sensitive to the macroeconomic volatilities. With customers being cautious in their spending and cash flows, the sales cycles are also dragging longer than expected. Revenues from sequencing instruments in Core Illumina decreased by a staggering 40% year over year in the second quarter, partly stemming from a decline in mid-throughput shipments and moderate instrument placements.
ILMN Stock Trades Cheap
Boasting a Value score of B, Illumina’s forward 12-month price-to-earnings (P/E) of 33.83X is much lower than the industry average of 98.83X.
P/E Ratio Forward Twelve Months (F12M)
Image Source: Zacks Investment Research
Our Verdict on ILMN
Illumina’s recent achievement of a new yearly high favorably reflects the market’s response to its latest benchtop sequencers. The continued execution of its key priorities, as well as the new roadmap for accelerated revenue and EPS growth through innovation and partnership, also creates optimism. However, a challenging customer backdrop in the mid-throughput business and China’s macroeconomic issues remain a headwind. Those eyeing ILMN, currently carrying a Zacks Rank #3 (Hold), should closely monitor the developments and wait for a better entry point. Existing investors may consider retaining the stock, given its cheaper valuation. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.