Why Everyone Likes Illumina Again

Health and Healthcare

Published: October 21, 2014 3:08 pm

Illumina Inc. (NASDAQ: ILMN) reported its earnings before the market opened Monday as $0.77 in earnings per share and $481 in revenue which beat out consensus estimates. On the heels of this earnings report, analysts jumped all over upgrading ratings and/or price targets for this company. Illumina may not be a household name to those outside of genomics and bio-investing, but this is one of the key players in the quest for the $1,000 genome. This in turn is expected to lead to much deeper breakthroughs in personalized medicine and personalized medical treatments.

24/7 Wall St. has covered research calls on Illumina from the likes of Janney Capital, Credit Suisse, ISI Group, Merrill Lynch, and S&P Capital IQ. All in all, the trend for targets and upside is up and away!

Janney Capital upgraded Illumina to a Buy rating from Neutral with a price target of $192 from $165. According to Janney, the upgrade is due to the company expanding its core customer base from traditional academic and government institutions into clinical and applied markets.

Credit Suisse reiterated its Outperform rating for Illumina with a price target of $205, up from $198. Credit Suisse noted that Illumina’s top and bottom line performance was well ahead of its expectations for the third-quarter earnings report. The company raised its 2014 full year guidance to roughly 30% sales growth and earnings per share in the range of $2.63 to $2.65. Considering this, Credit Suisse upped its estimates, as well, into 2015 and beyond. Estimates for the following years were given as:

2014: $2.64 from $2.64
2015: $3.52 from $3.52
2016: $4.74 from $4.74

The ISI Group has a neutral rating for Illumina but it raised its price target to $180.50 from $175.

Merrill Lynch has a Buy rating, and raised its target to $220 from $210. noted that Illumina’s third-quarter results were significantly above consensus estimates due to strong sales and operating leverage. The firm increased its price target to $220 from $210, and remains positive on the company because of its strong execution, market leadership, and headway into its $20 billion total addressable market.

S&P Capital IQ went up to a $230 price target. The firm said in its report,

“We raise our ’14 earnings per share estimate $0.35 to $2.65 and 12-month target price $38 to $230 on a 2.7X PEG ratio, a premium to peers, and at the high-end of its 3-year historical range. Third quarter adjusted earnings per share of $0.77 versus $0.45 is $0.21 ahead of our estimate. Sales grew 35%, well ahead of our 29% forecast, and was Illumina’s best year-over-year growth since the second quarter in 2011. Sales were driven by robust sequencing sales, up 47% and more importantly, instrument sales rose 55% on strong demand for HiSeq X Ten and NextSeq 500, that should drive future consumable sales. We see Illumina continuing to grow its market leadership position. Jeffrey Loo, CFA.”

Shares of Illumina have recently been trading up over 9% at $179.94. The company’s stock has a consensus analyst price target of $198.21 and a 52-week trading range of $80.88 to $185.00.

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