Illumina Reported Its Fastest Top-line Growth Since 2015

Analysts at Baird turned bullish on Illumina, Inc. ILMN in reaction to the company's third-quarter earnings report in which revenue grew at its fastest pace since the fourth quarter of 2015.

Analyst Catherine Ramsey Schulte upgraded Illumina's stock from Neutral to Outperform with a price target boosted from $184 to $228.

Most notably, Illumina's revenue grew 18 percent to $714 million in which consumables revenue grew 14 percent, instruments revenue grew 25 percent and Services/Other grew 26 percent, Ramsey Schulte said in a note. In fact, the strength in consumables marks the largest growth rate ever and was driven by strength across all platforms, including NovaSeq, HiSeq, and NextSeq.

The analyst cited four key reasons to justify an upgrade to Outperform:

• The company has a good near-term instrument visibility while it's simultaneously working through a backlog in NovaSeq;
• NovaSeq S4 Flow Cell will likely help drive Ilumina's next few quarters of NovaSeq orders;
• Sequencing consumables are performing better than previously expected during the NovaSeq transition; and
• A more favorable mix of new-to-sequencing/benchtop customers are buying NovaSeq which should give investors "increased optimism" on the total NovaSeq's market opportunity.

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