Is Illumina (ILMN) Worth Adding to Your Portfolio?
Recently, Zacks Investment Research upgraded Illumina Inc. (ILMN) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Illumina delivered strong second-quarter 2014 results with both the top and the bottom line surpassing the respective Zacks Consensus Estimate. Another major positive highlight of the quarter was the company’s optimistic full-year outlook for growth on both lines.
In the quarter under review, Illumina’s adjusted earnings per share (EPS) of 57 cents breezed past the Zacks Consensus Estimate of 51 cents. Earnings also exceeded the year-ago quarter figure by 32.6%. Revenues surged 29.3% to $447.6 million, comfortably beating the Zacks Consensus Estimate of $429 million as well.
At the same time, we are also impressed with the company’s market expansion plan which focuses on three major areas, namely reproductive health, oncology and emerging market. Going forward, Illumina’s prospects seem strong on the back of strong global demand for its products and an attractive portfolio supported by successful launch of new offerings.
In August, the company formed alliances with three leading pharmaceutical companies namely AstraZeneca, Janssen Biotech and Sanofi. These firms are expected to develop a complete NGS-based oncology test system which will be a transition from single-analyte companion diagnostics to panel-based assays for “companion therapeutics” – a new era in oncology.However, government budget cuts, including NIH funding issues, are major downsides. Moreover, the competitive landscape also remains tough.
Notably, a strong performance prompted a rise in the Zacks Consensus Estimate for earnings in 2014 and 2015 over the last 60 days. It increased 6% to $2.29 in 2014 as 12 of 14 estimates moved up while the same went up 9% to $2.82 for 2015 as 11 of 14 estimates moved north. The expected long-term growth rate for the stock is 20%.
Other Stocks to Consider
Investors interested in the same sector can also consider stocks like Genomic Health Inc. (GHDX), Alexion Pharmaceuticals, Inc. (ALXN) and Affymetrix Inc. (AFFX). All the three stocks carry a Zacks Rank #2 (Buy).
Read the Full Research Report on ALXN
Read the Full Research Report on ILMN
Read the Full Research Report on AFFX
Read the Full Research Report on GHDX
Zacks Investment Research
