Market Overview

Market, Policy Trends Are Shifting In Illumina's Favor, Morgan Stanley Says In Upgrade

Market, Policy Trends Are Shifting In Illumina's Favor, Morgan Stanley Says In Upgrade
Related ILMN
38 Stocks Moving In Tuesday's Mid-Day Session
24 Stocks Moving In Tuesday's Pre-Market Session
Top-Rated Stocks Near Buy Point Ahead Of Earnings: Illumina (Investor's Business Daily)

The bearish case for Illumina, Inc. (NASDAQ: ILMN) has come to an end for four key reasons, according to Morgan Stanley.

The Analyst

Analyst Steve Beuchaw upgraded Illumina from Underweight to Equal-weight with a price target lifted from $210 to $320.

The Thesis

Illumina stands to benefit from multiple market developments and policy changes, Beuchaw said in the upgrade note. (See the analyst's track record here.) 

They are:

  • The success of DNA-driven drug administration, which prompted the FDA's support of DNA-based companion cancer diagnostics and expansion of Medicare reimbursements.
  • Government funding for DNA analysis could expand globally.
  • Consumer interest in DNA-derived applications.
  • A global mix shift toward genomic research.

Morgan Stanley's prior bear thesis on Illumina now appears "flawed," but a bullish stance on the stock can't yet be made for the following reasons, Beuchaw said:

  • The stock's more than 50-percent return since the start of 2018 implies it is trading at a 17-percent premium to its 10-year historical multiple.
  • Expectations for NovaSeq to see a growth deceleration in the third year of its cycle in 2019.
  • Any timeline for favorable reimbursement changes are difficult to model.
  • Competition could intensify.

Illumina's longer-term market opportunity is "undeniable," but its valuation is stretched at current levels, according to Morgan Stanley. 

Price Action

Illumina shares were trading up 1.75 percent at $338.19 at the time of publication Tuesday. 

Related Links:

Baird Weighs In On Illumina's Guidance, NovaSeq Platform

Illumina Reported Its Fastest Top-line Growth Since 2015

Photo courtesy of Illumina. 

Latest Ratings for ILMN

Jan 2019Morgan StanleyMaintainsEqual-WeightEqual-Weight
Jan 2019UBSUpgradesNeutralBuy
Oct 2018BarclaysMaintainsOverweightOverweight

View More Analyst Ratings for ILMN
View the Latest Analyst Ratings

Posted-In: DNA Morgan Stanley NovaSeq Steve BeuchawAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga


Related Articles (ILMN)

View Comments and Join the Discussion!

Latest Ratings

PANWBMO CapitalUpgrades240.0
UAAGoldman SachsUpgrades28.0
GPSGoldman SachsDowngrades0.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

RBNZ Preview: Inflation Ticking Up, Outlook For A Rate Hike In Late 2019 Unaltered

BTIG Maintains Neutral Snap Thesis Ahead Of Q2 Report, But 'Patience Is Wearing Thin'