The new cohort of advanced genomic therapy has taken personalized medicines to an entirely new level. With increasing emergence of life-threatening ailments across the globe, analysis of genetic variation and function has become crucial for the medical care market. This has enormously broadened the scope for companies like Illumina (ILMN - Free Report) .
Under Jay Flatley’s chairmanship, Illumina has redefined success in life sciences therapy and is one of the frontrunners in the field of genomic sequencing. The company has achieved success in genomic medicine in the past five years but Flatley considers this as just the tip of the iceberg.
Illumina Shines in 2018
Year 2018 was particularly good for Illumina, thanks to several strategic investments and planned expansion. This year, the company’s longstanding collaboration with Genomics England and United Kingdom’s National Health Services sequenced its 100,000th genome as part of UK’s pioneering 100,000 Genomes Project. According to Illumina, this achievement has huge significance for the future of genomic medicine.
Internationally, the company achieved quite a few landmarks in 2018. In January, the company announced the regional availability of its BaseSpace Sequence Hub in China. Later, it announced a partnership with Chinese Medical Genetics Association (CMGA) of Chinese Medical Doctor Association (CMDA) to launch whole-genome sequencing for children with birth defects and rare undiagnosed diseases in the country.
Illumina has also partnered with China’s leading personal genomics company WeGene. This partnership has helped Illumina to establish an advanced microarray laboratory in Asia, thereby expanding its throughput capacity for consumer DNA testing in this emerging economy. The company also expanded its clinical portfolio in South Korea in 2018.
In terms of new ventures, the company has invested in five new next-generation sequencing startups this year. The company’s NovaSeq kit has delivered robust revenues so far in 2018 and currently it expects full-year NovaSeq shipments to remain between 330 and 350.
The above discussion has already proven Flately’s perspective beyond debate but does Illumina stock reflect the same? Of course, it does, having recorded a staggering 999% gain in the past 10 years. In 2018 alone, it has registered a significant 24.7% gain, thus keeping investors in high spirits.
Looking Beyond Illumina
Illumina’s gains are indeed impressive. But is it the sole star in the firmament setting benchmarks for others to try and emulate? Factually, there are a number of stocks in the medical universe which are neck and neck with Illumina. However, their products have missed the attention of investors.
While Illumina’s prospects are bright, currently its shares seem to be overvalued. The company has a price-to-earnings ratio (TTM) of 47.75, which shows that it is overvalued compared to the Medical - Biomedical and Genetics industry average of 42.18, and also expensive compared to the broader Medical sector’s ratio of 17.57.
It’s time we take a look at some stocks that have the potential to match Illumina’s growth story in 2019 while justifying their valuation.
3 Medical Stocks Likely to Tread on Illumina’s Path
Here are three stocks from the broader Medical sector that are poised to register earnings growth of 5% or more in 2019, carry a favourable Zacks Rank and have a Value Score of A. Our research shows that stocks with a Style Score of A when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best upside potential. The future plans outlined by these companies suggest that there is more room for the stocks to gain.
HCA Healthcare, Inc. (HCA - Free Report) : It is the largest non-governmental operator of acute care hospitals in the United States andhas been riding high on sustainable revenue growth in the past few years. Its revenues increased 7.3% in the first nine months of 2018 backed by an increase in same facility admissions and equivalent admissions, same facility emergency room growth and surgical growth. We expect the trend to continue, given the company’s efforts to enter large, fast-developing urban markets with growing population in constant need of its services.
The company delivered four-quarter average positive earnings surprise of 11.2%. Additionally, share price of this company has increased 32.2% year to date. In 2019, its earnings are expected to rise 10.1% from the year-ago period. The company’s long-term historical earnings growth rate of 12.2% also highlights its growth potential. Currently, HCA Holdings carries a Zacks Rank #2 and has a Value Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
Anthem, Inc. (ANTM - Free Report) : This leading managed care organization’s revenue growth remains impressive and it recorded CAGR of 6.3% in the 2010-2017 period. The same was up 2% in the first nine months of 2018. This was primarily backed by the company’s active acquisitions and strategic collaborations along with its improving net investment income. The company’s buyout of HealthSun and America's 1st Choice boosted its revenues. The company’s tie-up with Blue Cross Blue Shield of Minnesota is expected to go live in the fourth quarter and serve 375,000 Medicaid and dual-eligible members.
The company delivered four-quarter average positive earnings surprise of 5.11%. Additionally, share price of this company has increased 10.6% year to date. In 2019, its earnings are expected to rise 12.4% from the year-ago period. This apart, the company’s long-term expected earnings growth rate is 13.1%. Currently, Anthem carries a Zacks Rank #2 and has a Value Score of A.
Encompass Health Corporation (EHC - Free Report) : This company provides facility-based and home-based post-acute healthcare services in the United States. The company offers both facility-based and home-based patient care through its network of inpatient rehabilitation hospitals, home health agencies and hospice agencies. Over the recent past, the company has demonstrated strong top-line growth driven by volume and pricing growth in the inpatient rehabilitation and the home health and hospice segment. This trend should continue through 2019.
The company has trailing four-quarter average positive earnings surprise of 13.8%. Additionally, share price of this company has increased 20.5% year to date. In 2019, its earnings are expected to rise 6% from the year-ago period. This apart, the company’s long-term expected earnings growth rate is 10.3%. Encompass Health too carries a Zacks Rank #2 and has a Value Score of A.
In addition to the stocks discussed above, would you like to know about our 10 top tickers to buy and hold for the entirety of 2019?
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