Illumina Shines At JPMorgan Conference With Bullish Prelim Guidance

Illumina, Inc. ILMN pre-announced its Q4:16 sales Monday above the consensus and the estimate, while guiding to 2017 revenue marginally above the consensus forecast at the midpoint. The EPS guidance is in line with the consensus.

Leerink’s Puneet Souda maintains a Market Perform rating on the company, while raising the price target from $114 to $132.

New Product Launch

Illumina also launched its high-throughput sequencing platform, NovaSeq, Monday, which Souda believes could drive the stock higher Tuesday.

NovaSeq is expected to provide sequencing that is three times faster and 10 percent cheaper than Illumina’s current HiSeq X system.

“Though we see this instrument upgrade as meaningful, we believe it will only deliver additional capacity into a market already experiencing overcapacity in the near-term,” the analyst stated, while adding, “We believe that adding further capacity - even with a major upgrade — is unlikely to lift demand, especially from diagnostics customers that are still struggling to meet margin targets and find it hard to lay out $985,000 for NovaSeq.”

Souda believes NovaSeq could cannibalize sales of both HiSeq 3000/4000 and HiSeq X, although Illumina expects to see $100 genome over the longer term, with instrument upgrades continuing to drive prices down and performance up.

2017 Guidance

For 2017, the company guided to sales growth of 10–12 percent year-on-year, with the midpoint of the range at $2.66 billion, in line with the consensus and estimate.

Illumina also guided to non-GAAP EPS of $3.60-$3.70, again in line with the consensus expectations, although marginally above the previous estimate.

At last check, shares of Illumina were up 14.25 percent on the day at $161.71.