Stock (Symbol) |
Illumina (ILMN) |
Stock Price |
$198 |
Sector |
| Healthcare |
Data is as of |
| August 8, 2017 |
Expected to Report |
| Oct 30 |
Company Description |
 ILMN offers integrated systems, consumables and analysis tools for genetic analysis. It also manufactures sequencing and array platforms, reagent kits and scanning equipment. Its customers include genomic research centers, academic institutions, government laboratories, hospitals and reference laboratories, pharmaceutical, biotechnology, agrigenomics, commercial molecular diagnostic and consumer genomics companies. Its sequencing instruments perform a range of nucleic-acid analyses across a range of sample sizes. Source: Thomson Financial |
Sharek’s Take |
 Illumina (ILMN) broke out after the company reported earnings last qtr — and has continued to go higher more than a month later. Illumina develops state of the art products for gene sequencing. The company’s HiSeq X system was introduced in 2014 and profits soared 52% that year as the stock ran from $115 to $185. Then last January Illumina introduced a new revolutionary gene sequencing system, NovaSeq. But the problem is institutions and universities just loaded up on the last great system, so sales were expected to be light, as organizations are tied to budgets and upgrading systems 2-3 years later might be hard to do (Illumina does do trade-ins and rebates for upgrades to ease the pain, but NovaSeq’s cost $1 million each). This company has been an integral part of reducing the cost of sequencing a gene from $100 million in 2001, to $100,000 in 2009 and $1000 in 2014. NovaSeq will eventually take that cost down to $100. ILMN said orders for NovaSeq were great, with demand coming from commercial customers with flexible budgets. The company shipped and installed 80 instruments. Still, sales rose only 10% — with profits down 5% — so this jump in the stock price is all about the future. With an Est. LTG of just 15% a year and a P/E in the 50’s this is an expensive stock, but the company is a revolutionary technology leader. Since I did these charts last month ILMN has gone up from $198 to $214 so I obviously missed the boat. The stock is on my radar for the Growth Portfolio. |
One Year Chart |
 This stock got down to my wish price of $125 earlier in the year, but at the time it seemed competition may have had better products. That obviously wasn’t the case. Also, it’s odd how the stock soared to $200 even though qtrly profit growth was stagnant. And even after last qtr’s good news 2017 profit estimates increased only 2 cents to $3.65. This is obviously an expensive stock, and as an investor you have to pay-up to get in. Great looking breakout on this chart, and the stock has since climbed even higher to $214. Profit Estimates for the following qtrs are +2%, +41%, +55% and 30%. The Est. LTG of 15% is low, I feel ILMN will grow faster. The company did beat the street last qtr, but that figure had been lowered three times leading up to the announcement. |
Fair Value |
 My target was to buy ILMN when the P/E got down to 35, which was $127 earlier in the year. I missed my chance at this when the stock fell to $124. Now with a P/E of 54 I feel ILMN is high, but honestly the stock had a median P/E of 56 in 2014 & 2015 so in the end I am probably not a good authority on this stock. |
Bottom Line |
 Illumina’s been a good stock for the past decade, but it’s been a bumpy ride for investors. Luckily, the NovaSeq system is revolutionary and should carry profits higher the next 3-5 years. I just feel it’s better to get this stock when it’s down than to chase it at high levels (but I’ve missed the boat so far so what do I know?). ILMN is on my radar for the Growth Portfolio. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
