Market Overview

PropThink: ILMN Getting a Lift From Roche Comments; Take-Out Possibility Remains


By David Moskowitz

We continue to believe that speculation that Roche (OTC: RHHBY) is back evaluating Illumina (NASDAQ: ILMN) as a take-out, is real, which you can read about in our prior story here. ILMN shares were off over 6% Monday, as investors saw the company hire a new head of investor relations, Rebecca Chambers, which was taken as a sign that ILMN would not be sold in the near term. We think this is ridiculous, and more importantly, Roche said on its earnings call Tuesday morning that it plans to continue investing in the gene sequencing segment. Of course, Roche CEO, Severin Schwan, declined to comment on speculation that the company might reconsider its bid for ILMN, but the prior run that Roche took at the company is telling. ILMN CEO Jason Flately has been vocal that a sale of the company is a possibility. We think that signals here are clear, and a Roche bid of $60 would not surprise us. Expect investors to take advantage of ILMN's weakness yesterday, with the stock up in early trading today on the Roche comments.

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