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

Zacks Equity Research
Our proven model does not show that Air Products (APD) is likely to beat estimates this quarter.

Illumina, Inc. ILMN has been gaining investor confidence on consistently positive results. Over the past year, shares of Illumina have rallied 29% compared with the S&P 500 index’s 0.5% gain.

This renowned sequencing and array-based genetic analysis solution provider has a market cap of $44.26 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 an attractive pick for investors at the moment.

What Makes the Stock an Attractive Pick?

Worldwide Expansion to Drive Growth

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 fourth quarter, Illumina witnessed impressive growth in the Asia-Pacific region propelled by 28% sequencing growth (adjusting for the tariff impact) in Greater China. Obviously, among the emerging markets, China currently offers the maximum scope for growth to Illumina.

Strategic Partnerships to Strengthen Business

We are optimistic about Illumina’s expansion strategy through the enhancement of its portfolio of sequencing products, and the development of strategic partnerships with therapeutic and diagnostic services providers. For instance, within clinical markets, extended RAS companion diagnostic kit was developed by Illumina in partnership with Amgen to identify patients who are eligible for treatment of metastatic colorectal cancer with Vectibix.

In 2018, Illumina announced the acquisition of Edico Genome to strengthen the next-generation sequencing (NGS) platform. The acquisition is expected to help Illumina provide an enhanced data analysis experience to NGS users along with an expanded customer base.

Growth in Oncology Space

Lately, to catalyze clinical markets, Illumina has adopted a strategy to deliver market-leading technologies and tailored solutions that will enable customers to personalize patient care through genomics. The company is seeing a rise in the number of liquid biopsy and clinical commercial customers. In 2018, the NovaSeq platform consistently demonstrated strong momentum on solid performance by the S1, S2 and S4 flow cells.

Riding on NovaSeq platform strength, the company recorded sequencing system revenues of $159 million in the fourth quarter, a new quarterly record for Illumina. While the HiSeq replacement cycle is under process, the company is optimistic to note that majority of HiSeq and HiSeq X customers have placed NovaSeq orders.

Which Way Are Estimates Heading?

For the current quarter, the Zacks Consensus Estimate for earnings is pegged at $1.34. The same for revenues stands at $834.29 million, mirroring a year-over-year improvement of 6.7%.

For 2019, the Zacks Consensus Estimate for earnings is pinned at $6.53, reflecting 14.2% year-over-year growth. The same for revenues is pegged at $3.77 billion.

Other Key Picks

Other top-ranked stocks in the broader medical space are Penumbra, Inc. PEN, Wright Medical Group N.V. WMGI and DexCom, Inc. DXCM. Notably, each of these stocks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Penumbra’s long-term earnings growth rate is expected at 20%.

Wright Medical’s long-term earnings growth rate is expected at 11%.

DexCom’s second-quarter earnings per share are projected to grow 160%.

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