Illumina, Inc. (NASDAQ:ILMN) shares fell 9.2% to US$290 in the week since its latest full-year results. Illumina reported US$3.5b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$6.74 beat expectations, being 2.3% higher than what analysts expected. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the latest consensus from Illumina's 16 analysts is for revenues of US$3.88b in 2020, which would reflect a meaningful 9.7% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to shrink 3.0% to US$6.61 in the same period. Before this earnings report, analysts had been forecasting revenues of US$3.92b and earnings per share (EPS) of US$6.63 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
Analysts reconfirmed their price target of US$337, showing that the business is executing well and in line with expectations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Illumina, with the most bullish analyst valuing it at US$390 and the most bearish at US$285 per share. This shows there is still quite a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Illumina's performance in recent years. We would highlight that Illumina's revenue growth is expected to slow, with forecast 9.7% increase next year well below the historical 13%p.a. growth over the last five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 8.0% next year. Factoring in the forecast slowdown in growth, it looks like analysts are expecting Illumina to grow at about the same rate as the wider market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. The consensus price target held steady at US$337, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Illumina going out to 2024, and you can see them free on our platform here.
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