Illumina: Updated Research Report - Analyst Blog

On Jun 20, 2014, we issued an updated research report on life sciences company Illumina Inc. ILMN. Illumina delivered strong fourth-quarter 2013 results with both the top and the bottom line surpassing the respective Zacks Consensus Estimate. Another major positive highlight of the quarter was the company's optimistic outlook for both top- and bottom-line growth in 2014.

In the quarter under review, Illumina's adjusted earnings per share of 53 cents breezed past the Zacks Consensus Estimate of 44 cents. Earnings also exceeded the year-ago quarter figure by 15.2%. Revenues surged 27.1% to $420.8 million, surpassing the Zacks Consensus Estimate of $391 million.

We are also impressed with the company's recently released market expansion plan which focuses on three major areas including reproductive health, oncology and emerging market. Going forward, Illumina's prospects seem strong on the back of strong global demand for its products and an attractive product portfolio along with successful launch of new products like NextSeq 500 and HiSeq X Ten.

With the proposed launch of the pre-implantation genetic screening product – VeriSeq PGS, to be used on the popular MiSeq platform, and a dedicated management team, we believe Illumina is well positioned to exploit a more than $20 billion market opportunity and eventually meet its revised guidance.

In addition, expansion through strategic acquisitions – the most recent one being NextBio, and partnerships with therapeutics and diagnostic service providers are expected to add value. Although government budget cuts, including NIH funding issues, were the major downsides, strong worldwide demand and solid contributions from the sequencing business are expected to overcome the headwinds.

The stock currently sports a Zacks Rank #1 (Strong Buy).

Other Stocks to Consider

Investors interested in the similar sector can also consider stocks like Actelion Ltd. (ALIOF), Gilead Sciences Inc. GILD and Osiris Therapeutics, Inc. OSIR. All the three stocks carry a similar Zacks Rank #1.