Stock (Symbol) |
Illumina (ILMN) |
Stock Price |
$147 |
Sector |
| Healthcare |
Data is as of |
| October 26, 2015 |
Expected to Report |
| Jan 25 – Jan 29 |
Company Description |
 Illumina, Inc. (Illumina) is a developer and manufacturer of life science tools and integrated systems for the analysis of genetic variation and function. Illumina provides a line of genetic analysis solutions, with products and services that serve a range of interconnected markets, including sequencing, genotyping, gene expression, and molecular diagnostics. The Company is organized in two business segments: Life Sciences and Diagnostics. Its Life Sciences business unit includes all products and services related to the research market, namely the product lines based on its sequencing, BeadArray, VeraCode, and real-time PCR technologies. Its Diagnostics business unit focuses on molecular diagnostics. Its customers include genomic research centers, academic institutions, government laboratories, and clinical research organizations. Source: Thomson Financial |
Sharek’s Take |
 Illumina (ILMN) tumbled after the company reported 4% profit growth. Investors have taken the stock down from the $240-$200 level to the $140-$160 level as the P/E was just too high. Illumina is king of gene sequencing, making machines that are state of the art and also lowering the prices of its older units. It has a stranglehold on its market that it should be able to keep as far as I can see. The company has so much profits coming in that it funds a modern state-of-the-art manufacturing facilities, spends heavily on R&D and just announced a stock buyback program of $250 million, or 1% of market cap. ILMN’s P/E has dropped from 64 to 39 since last qtr, and this is a good area to collect the stock. But I have little cash balances in my client accounts, and with -8% and -2% profit growth expected the next two qtrs I feel we can be patient and pick up the stock during the next six months. |
One Year Chart |
 Terrible looking stock chart, but I see this as a buying opportunity for one of the greatest companies in the world. ILMN had 4% profit growth last qtr on 15% revenue growth, but warned a little and estimates came down across the board. I feel the P/E of 39 is fair but would rather get in between 30x and 35x earnings. I also feel the company will grow profits faster than the 20% long-term rate analysts expect. |
Fair Value |
 Looking at ILMN’s Fair Value, I feel the stock is selling around where it should in 2016. With not much upside for a year, I am going to take a change and wait on buying in until I get a slightly better price or have cash in client accounts that I am looking to put to work. |
Bottom Line |
 It’s amazing how quickly the stock shot up the past 3 years. You used to be able to get into ILMN at 27x earnings. The P/E shot up a lot, but has now come back to reality.Now is an excellent opportunity for growth investors to get in but when owning this stock you have to be able to withstand the volatility. Still, I will take my chances and sit on the sidelines for now as growth looks weak the next two quarters and I feel I can get ILMN around this price after the New Year. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
