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Illumina (ILMN) Hits 52-Week High, Can the Run Continue?

Zacks Equity Research

Shares of Illumina, Inc. ILMN scaled a new 52-week high of $379.54 on Jul 5, closing the session a tad bit lower at $378.23. Impressive top-line performance during the first quarter and an encouraging 2019 outlook contributed to this rally.

Additionally, Illumina had a great run on the bourses in the past year. The stock has surged 31% compared with the S&P 500 Index’s 6.2% rise. The return is also higher than the broader industry’s 19.6% decline.

Considering the above factor, one may expect the global life sciences major to scale new highs in the upcoming quarters as well. Further, the company has an average four-quarter positive earnings surprise of 16.7%.

Solid Top-line Performance and 2019 Outlook:  Market continues to remain upbeat following Illumina’s strong first-quarter performance, wherein both earnings and revenues surpassed the respective Zacks Consensus Estimate. Notably, top-line growth was registered across the company’s high, mid and low throughput categories. This apart, Illumina consistently witnesses strong demand for sequencing and array systems, consumables and services. At present, HiSeq to NovaSeq upgrade cycle is progressing well and NextSeq placements are strong. Illumina’s upbeat 2019 EPS guidance is an added positive.

Partnership to Accelerate Innovation: Management is confident about the recent collaboration between Illumina and the Lundbeck Foundation GeoGenetics Centre at the University of Copenhagen, Denmark. The aim of this partnership is to study the relationship between the evolutionary history of select mental and neurological disorders and infectious pathogen and acquire new knowledge in terms of the medical and biological understanding of special factors underlying the development of human neuropsychiatric diseases through the ages. The project may result in a new approach to the development of medicines and other therapeutic treatments for mental and neurological conditions.

Impressive Product Portfolio: Investors seem to be optimistic on Illumina’s growth prospects within the noninvasive prenatal testing (NIPT), post the company’s launch of VeriSeqNIPT Solution v2 in June 2019. It is a CE-IVD, next-generation sequencing (NGS)-based approach to NIPT. VeriSeq NIPT Solution v2 offers the most detailed view of the fetal genome compared to other CE-IVD NIPT products, aiding healthcare providers to support expectant parents with informed, timely and personalized pregnancy management options. 

Zacks Rank and Other Key Picks

Illumina currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader medical space are Teleflex Inc. TFX, Penumbra PEN and Bruker Corporation BRKR, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) 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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