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Here's Why You Should Invest in Illumina (ILMN) Stock Now

Zacks Equity Research

Illumina, Inc. ILMN continues to register strong top-line growth across its high throughput, mid throughput and low throughput categories.

Over the past year, shares of Illumina have rallied 17.2% against the industry's 16.5% decline and the S&P 500’s 4.8% increase.

This renowned sequencing and array-based genetic analysis solution provider has a market cap of $46.42 billion. The company has an earnings growth rate of 21.5% for the next three to five years.

With solid prospects, this Zacks Rank #2 (Buy) stock is a prudent choice for investors at the moment.

What Makes the Stock an Attractive Pick?

Solid Global Prospects in Reproductive and Genetic Health Market

Illumina is currently keeping well with its goals to strengthen foothold in the multi-billion-dollar gene sequencing market with some highly competitive products in its existing portfolio and pipeline. This market is developing rapidly on a global scale which has allowed the company to witness consistent growth in the number of non-invasive prenatal test (NIPT) samples. Within United States, positive NIPT reimbursement trends have been observed.

The company continues to witness increasing average-risk coverage with recent decisions from Florida and Minnesota Medicaid along with Blue Cross Blue Shield Tennessee in North Carolina. In China, Illumina’s partners are currently extending their reach beyond NIPT and are developing clinical applications including oncology. In Europe, VeriSeq NIPT delivered more than 50% revenue growth in the first quarter of 2019.

Impressive Growth in Oncology Business

Lately, Illumina has adopted a strategy to deliver market-leading technologies and tailored solutions that will enable customers to personalize patient care through genomics.In its oncology business, yet another area of focus in Illumina’s market expansion, this strategy has led the company to develop pharma partnerships and bring to market custom panel tests. The company has been seeing a rise in the number of liquid biopsy and clinical commercial customers. During the last-reported quarter, the NovaSeq platform consistently demonstrated strong momentum on solid performance by the S1, S2 and S4 flow cells.

Focus on Geographic Expansion

Apart from North America, Illumina markets and distributes products to customers in Europe, Latin America, and the Asia-Pacific region, either through its direct selling force or through distributors that specialize in life science products. 

In the first quarter, emerging markets such as the Middle East, Africa and Russia demonstrated impressive growth with a record number of sequencing systems and sequencing consumables delivered in the quarter. Greater China grew 13% year over year driven primarily by sequencing consumables for NIPT and oncology applications in addition to arrays.

Inorganic Investments to Strengthen Business

We are optimistic about Illumina’s expansion strategy through the enhancement of its portfolio of sequencing products through new purchases and the development of strategic partnerships with therapeutics and diagnostic services providers.

In terms of acquisitions, Illumina currently expects to close its $1.2-billion purchase of Pacific Biosciences. The addition of Pacific Biosciences' long-read platform will help the company better deal with select applications such as de novo sequencing and sequencing of highly homologous regions of genomes.

Which Way Are Estimates Headed?

For the current quarter, the Zacks Consensus Estimate for earnings is pegged at $1.40. The same for revenues stands at $886.9 million, suggesting a year-over-year improvement of 6.9%.

The Zacks Consensus Estimate for 2019 earnings is pinned at $6.68, indicating 16.8 % year-over-year growth. The same for revenues is pegged at $3.76 billion.

Other Key Picks

Other top-ranked stocks in the broader medical space are Stryker Corporation SYK, CONMED Corporation CNMD and DENTSPLY SIRONA Inc. XRAY, each currently carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Stryker’s long-term earnings growth rate is projected at 10.1%

CONMED’s long-term earnings growth rate is expected at 13.3%.

DENTSPLY SIRONA’s long-term earnings growth rate is predicted to be 11.5%.

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