Morgan Stanley Raises ILMN Target To $78

Morgan Stanley is raising its target on Illumina, Inc. ILMN to $78 and continue to like the stock for 2011. “There are three keys to our positive thesis,” Morgan Stanley writes. “1) an emerging and underappreciated margin leverage story with Illumina on track to roughly double earnings in two years, 2) support for the multiple from continued HiSeq strength and potential for sustained microarray reacceleration (~40% of revenue) in 2011+, and 3) new product introductions over the next 12-24 months in microarrays and sequencing.” Morgan Stanley is raising its estimates modestly for 2011+. “Our target rises as we roll our valuation to ~39x our 2012e EPS of $1.96 or a PEG of 1.2x, in line with growth companies in the MS universe and supported by the MS What's in the Price that implies reasonable 6-7% long term growth,” Morgan Stanley adds. Illumina currently trades at $66.94.