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Illumina: Same Issues, Different Quarter

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Illumina: Same Issues, Different Quarter

Following Illumina, Inc. (NASDAQ: ILMN)'s negative pre-announcement after the market close Monday, Barclays said same issues continue to plague the company, which has made negative pre-announcements in three of the past five quarters.

Same Issues, New Issues

Barclays indicated the weakness was centered on its high throughput sequencing line of instruments, which has been weak in the three quarters of 2016.

However, the firm noted that some new weak areas have also emerged, as the company cribbed on weakness in Americas, adding on to its first half commentary of European weakness. Additionally, the firm pointed to the below-norm HiSeq utilization, which was below $300,000 per instrument.

Related Link: For Illumina, A New Quarter Means A New Narrative ... Again

Poised For Slowest Growth In Over 4 Years?

Analyst Jack Meehan expects fourth-quarter revenues to be up 3.7 percent year-over-year given the 3.3 percent revenue miss for the third quarter and uncertainty surrounding around a large number of binary orders in the fourth quarter. This, according to the firm, is the lowest growth rate since the second quarter of 2012. The company had guided fourth-quarter revenues to be flat to up sequentially.

Challenges

Barclays feels Illumina will be challenged in continuing to push the Next-Generation Sequencing portfolio into clinical markets. In these markets, the firm noted that established reimbursement is weak.

Sagging Product Cycle

While noting that the company's last major product cycle was in 2014, Barclays said it expects the markets to focus on what Illumina can announce in January to accelerate top line growth.

Lowering Price Target, Estimates

Accordingly, Barclays lowered its forecasts and its price target on the shares of the company to $142 from $150. However, the firm maintained its Equal-Weight rating, weighing the company's market leadership in Next Generation Sequencing against the lack of visibility into the next inflection point in growth.

At time of writing, shares of Illumina were down 24.86 percent at $138.92.

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Latest Ratings for ILMN

DateFirmActionFromTo
Jan 2019DowngradesBuyHold
Jan 2019MaintainsEqual-WeightEqual-Weight
Jan 2019UpgradesNeutralBuy

View More Analyst Ratings for ILMN
View the Latest Analyst Ratings

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