Is Illumina Worth Adding To Your Portfolio?

On Dec 10, 2014, we issued an updated research report on Illumina Inc. ILMN. Illumina posted a decent third-quarter 2014, beating the Zacks Consensus Estimate on both lines. Another major highlight of the quarter was the company's optimistic full-year outlook for both top- and bottom-line growth.

In the quarter under review, Illumina's adjusted earnings per share EPS of 77 cents steered 37.5% ahead of the Zacks Consensus Estimate and were up 71.1% from the year-ago number. Revenues surged 34.7% to $480.6 million, comfortably beating the Zacks Consensus Estimate of $451 million.

We are also impressed with the company's market expansion plan which focuses on three major areas including reproductive health, oncology and emerging markets. Going forward, Illumina's prospects seem strong on the back of strong global demand for its products and an attractive portfolio bolstered by successful launch of innovative products.

During the reported quarter, the company announced a strategic alliance with leading pharmaceutical companies like AstraZeneca, Janssen and Sanofi to develop a universal NGS-based oncology test system which will be used for clinical trials of targeted cancer therapies. The aim is to develop and commercialize a multi gene panel for therapeutic selection.

Moreover, the company is working on expanding its portfolio with several product launches. In addition, expansion through strategic acquisitions, the most recent one being Myraqa – a regulatory and quality consulting firm specializing in IVD and companion diagnostics, and partnerships with therapeutics and diagnostic services 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 help overcome the headwinds.

Illumina presently carries a Zacks Rank #1 (Strong Buy).

Other Stocks to Consider

Investors interested in the same sector may also consider stocks like Biogen Idec Inc. BIIB, Amgen Inc. AMGN and Affymetrix Inc. AFFX. All the three stocks carry a similar Zacks Rank #1.

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