Piper Jaffray Comments On Illumina Following Solid Quarterly Results

Illumina ILMN reported solid 1Q11 results, easily beating both Piper Jaffray's and Street consensus revenue and EPS expectations. Consistent with the latest database update, sequencing continues to gain traction, with strong HiSeq 2000 instrument demand and sequencing consumable strength driving top-line upside. Genotyping increased YoY and it looks for a 2H11 re-acceleration as the Omni 5M chip launches. Piper remains Overweight on Illumina and is increasing the price target to $85 from $79. Illumina reported 1Q11 revenue growth of 47.0% to $282.5M, handily topping Piper Jaffray's $253.7M and Street consensus expectations. Product and Service revenue increased 53.6% and decreased -14.4% to $266.7M and $15.8M, respectively. Sequencing revenue increased 80% yoy to ~$163.8M, above Piper's $125.7M estimate, while array revenue increased ~8% to ~$96.1M but fell short of Piper's $109.4M estimate. Despite Illumina's very strong quarter, management did not update F2011 revenue guidance of ~20% yoy growth and EPS growth >30% yoy to at least $1.38. Considering the strong 1Q11 results, continued sequencing momentum and the positive share buyback impact, Piper's estimates increase further ahead of management's F2011 targets. ILMN us trading lower at $68.31