Illumina (ILMN) Grows on Innovation & Strategic Partnerships

On May 30, we issued an updated research report on Illumina, Inc. ILMN, a Zacks Rank #3 (Hold) 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 the industry over the last three months. The stock has rallied 21.3% against the industry’s 6.6% decline.

Notably, Illumina exited the first quarter of 2018 on a solid note with better-than-estimated earnings as well as revenues. Moreover, we are encouraged by the significant year-over-year growth on both counts. This huge upside can be attributed to a strong rise in consumables across Illumina’s sequencing portfolio.

Illumina, Inc. Price

Illumina, Inc. Price | Illumina, Inc. Quote

 

Additionally, management is hopeful about the recently launched NovaSeq S1 flow cell reagent kit. The company also received a product approval certificate for the NextSeq 550Dx instrument from the Ministry of Food and Drug Safety in South Korea. In the field of oncology, Illumina’s collaborations with Bristol-Myers Squibb and Loxo Oncology are likely to garner positive results down the line. Meanwhile, the company’s raised 2018 guidance indicates that it will deliver an impressive performance in the quarters to come.

San Diego, CA-based Illumina is a tools and integrated systems provider for the analysis of genetic variation and function. The company focuses on product innovation via research and development, evident from its recent launch of iSeq 100 Sequencing System.

Post a promising first quarter, we expect Illumina to maintain its growth momentum on the continued uptake of sequencing consumables, instruments and microarray portfolios.

On the flip side, the company faces stiff competition in the sequencing, SNP (single nucleotide polymorphisms) genotyping, gene expression and molecular diagnostics markets with several bigwigs already enjoying a significant market share, intellectual property portfolios as well as regulatory expertise. Also, the National Institutes of Health funding issue raises a concern.

Key Picks

Some better-ranked stocks in the broader medical sector are Intuitive Surgical ISRG, ResMed Inc. RMD and Amedisys, Inc. AMED. While Intuitive Surgical sports a Zacks Rank #1 (Strong Buy), ResMed and Amedisys carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuitive Surgical has an expected long-term earnings growth rate of 12.1%.

ResMed has long-term historical earnings growth of 9.3%.

Amedisys projects long-term earnings growth of 17.5%.

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