On Aug 2, we upgraded Illumina Inc. (ILMN) to a Zacks Rank #2 (Buy). The upgrade came on the back of better-than-expected second-quarter 2013 results. Illumina Inc. is a life sciences company focused on the development and commercialization of DNA microarray and high throughput DNA sequencing tools for large-scale genetic analysis.
Why the Upgrade?
Illumina displayed a strong operating performance during the second quarter and easily outpaced earnings estimates. The company also witnessed robust sales growth for the 7th successive quarter on the back of strong worldwide performance and solid contributions from the sequencing business,especially the sequencing consumables.
Organic revenues increased 19% y/y, owing to strong worldwide demand for sequencing consumables and consistent sales growth of HiSeq instruments. The upward revision of guidance also boosts investor confidence.
The stronger-than-anticipated results triggered an uptrend in the Zacks Consensus Estimates, as analysts become more constructive on the stock’s future performance. This is evident from the movement witnessed in the Zacks Consensus Estimate that increased 3.5% to $1.72 for 2013 and 1.5% to $2.02 per share for 2014 in the past 30 days.
With more emphasis on the new line of products and global distribution platform, the company expects to sustain the growth momentum in 2013. The company now envisages revenue growth of 20% compared with 15% earlier.
Illumina is well positioned to maintain its leadership in the expanding high-end genetic research market. We believe the company will continue to be a key player in driving the development of research tools into clinical/diagnostic applications.
Other Stocks to Consider
Apart from Illumina, the other stocks worth considering in the MedTech industry include Affymetrix Inc. (AFFX), Hanger, Inc. (HGR) and Align Technology Inc. (ALGN), all carrying a Zacks Rank #1 (Strong Buy).
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