Illumina: Genetic Gains

11/30/2017 5:00 am EST

Focus: HEALTHCARE

Leo Fasciocco

Investment Columnist and Publisher, Ticker Tape Digest

Illumina (ILMN), based in San Diego, Ca., makes sequencing- and array-based solutions for genetic analysis. Its products serve customers in the research, clinical and applied markets, and enable the adoption of a range of genomic solutions, explains Leo Fasciocco, technical expert and editor of Ticker Tape Digest.

The company's portfolio of integrated systems, consumables and analysis tools addresses the range of genomic complexity, price points, and throughput, enabling customers to select the solution for their research or clinical challenge.

ILMN also provides reproductive-health solutions, including noninvasive prenatal testing, preimplantation genetic screening and diagnosis and neonatal and genetic health testing. Annual revenues for the company are $2.4 billion.

The stock climbed from $170.31 in August to a peak of $214.34 by September. The stock pulled back and formed an 11-week base. It has since broken clear of the upside resistance.

This year, analysts are forecasting a modest 13% increase in net to $3.75 a share from the $3.33 the year before.
Near term the key driver should be a significant acceleration in quarterly earnings growth. Net for the fourth quarter is expected to rise 39% to $1.18 a share from the 85 cents the year before.

The stock currently sells with a price-earnings ratio of 57. So, it is most suitable for aggressive investors.
We see good chances for an upside earnings surprise. The company topped the consensus estimate the past two quarters by 13 cents a share and 14 cents. 

Then in the first quarter of 2018, the Street is predicting a robust 66% leap in net to $1.06 a share from the 64 cents the year before. For all of next year analysts look for a 21% rise in net to $4.52 a share from the anticipated $3.75 this year.

We see good chances for an upside earnings surprise. The company topped the consensus estimate the past two quarters by 13 cents a share and 14 cents. We are targeting ILMN for a move to $255 a share off this breakout.

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