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Illumina, Inc. (NASDAQ:ILMN): Will The Growth Last?

Casey Hall

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On 30 December 2018, Illumina, Inc. (NASDAQ:ILMN) released its earnings update. Generally, analysts seem cautiously bearish, with earnings expected to grow by 11% in the upcoming year compared with the higher past 5-year average growth rate of 23%. By 2020, we can expect Illumina’s bottom line to reach US$915m, a jump from the current trailing-twelve-month of US$826m. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Illumina in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

See our latest analysis for Illumina

Can we expect Illumina to keep growing?

The longer term view from the 16 analysts covering ILMN is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

NASDAQGS:ILMN Future Profit February 1st 19

From the current net income level of US$826m and the final forecast of US$1.2b by 2022, the annual rate of growth for ILMN’s earnings is 13%. This leads to an EPS of $8.03 in the final year of projections relative to the current EPS of $5.62. Margins are currently sitting at 25%, approximately the same as previous years. With analysts forecasting revenue growth of 0.45969 and ILMN’s net income growth expected to roughly track that, this company may add value for shareholders over time.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Illumina, I’ve put together three important factors you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Illumina worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Illumina is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Illumina? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.