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Illumina (ILMN) Grows on Innovation & International Growth

Zacks Equity Research

On Jul 10, we issued an updated research report on Illumina, Inc. ILMN, a Zacks Rank #1 (Strong Buy) stock. The company’s market opportunities continue to expand owing to accelerated demand from clinical and translational customers. Its recent strategic collaborations are also expected to widen its product portfolio.

Shares of the company have outperformed its industry over the past three months. The stock has rallied 14.8% against the industry’s 4.7% decline.

Illumina exited the first quarter of 2019 on a solid note with both earnings and revenues beating the respective Zacks Consensus Estimate. Top-line growth was registered across the company’s high, mid and low throughput categories. Furthermore, Illumina continues to showcase a robust performance in a broad range of sequencing applications.

Illumina, Inc. Price

Illumina, Inc. Price

Illumina, Inc. price | Illumina, Inc. Quote

In terms of new products, the launch of the S Prime flow cell and TruSight Oncology 500 in the first quarter as a Research Use Only item, buoys investors’ optimism on the stock. In Europe, VeriSeq NIPT performed well and generated more than 50% revenue growth in the first quarter.

The company observed solid demand for sequencing and array systems plus consumables and services. Meanwhile, HiSeq to NovaSeq upgrade cycle is showing a fine progress and NextSeq placements are strong. We are also looking forward to the company's newly-inked Pacific Biosciences deal. Further, the company’s 2019 EPS guidance looks promising.

In the first quarter, the 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.

On the flip side, HiSeq consumables persist to decline as expected. Seasonality in DTC functionality also continues to erode Illumina’s microarray sales. Funding issues further restrict growth. Additionally, the company is operating in a tough competitive landscape.

Other Key Picks

A few other top-ranked stocks in the broader medical space are Teleflex Inc. TFX, Penumbra PEN and Bruker Corporation BRKR. While Penumbra sports a Zacks Rank of 1, the other two companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Teleflex’s long-term earnings growth rate is expected to be 13.7%.

Penumbra’s long-term earnings growth rate is projected at 21.5%.

Bruker’s long-term earnings growth rate is estimated at 12.6%.

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