On Sep 16, 2014, we issued an updated research report on life sciences company Illumina Inc. (ILMN). 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 was the company’s optimistic outlook for both top- and bottom-line growth in 2014.
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.
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 product portfolio along with successful launch of new products.
Further, expansion through strategic acquisitions, the latest being that of regulatory and quality consulting firm Myraqa, is expected to add value.We are also optimistic about Illumina’s expansion plan through the enhancement of its portfolio of sequencing products, and the development of strategic partnerships with therapeutics and diagnostic services providers.
In August, the company formed alliances with three leading pharmaceutical companies, namely AstraZeneca, Janssen Biotech and Sanofi. These firms are expected to help 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.
The stock currently carries a Zacks Rank #1 (Strong Buy).
Other Stocks to Consider
Investors interested in the same sector can also consider stocks like Amgen Inc. (AMGN), Gilead Sciences Inc. (GILD) and Heska Corporation (HSKA). All the three stocks sport a similar Zacks Rank #1.
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