On May 10, we upgraded
) to a Zacks Rank #1 (Strong Buy). The upgrade came on the back of
better-than-expected first-quarter 2014 results and an improved
2014 guidance. Illumina is a life sciences company focused on the
development and commercialization of DNA microarray and high
throughput DNA sequencing tools for large-scale genetic
Why the Upgrade?
Illumina displayed a strong operating performance during the
first quarter and easily outpaced earnings estimates. While
adjusted earnings per share (EPS) of 53 cents, which were up 15.2%
year over year, breezed past the Zacks Consensus Estimate of 44
cents, revenues climbed 27.1% to $420.8 million, surpassing the
Zacks Consensus Estimate of $391 million. This marks the tenth
quarter of sequential growth at the company.
The company benefited particularly from the strong worldwide
demand for products, particularly for its new instruments - NextSeq
500 and HiSeq X Ten and solid contributions from the sequencing
business. Moreover, on the back of solid results across more
than 15 different metrics including shipments and orders for
sequencing instruments and services as well as HiSeq and MiSeq
consumables, Illumina delivered record orders, shipments and
revenues in the first quarter of 2014.
Based on its strong first-quarter results and increased demand
for HiSeq X Ten, Illumina revised its business outlook for full
year 2014. The company now expects adjusted EPS in the range of
$2.10-$2.15 (from earlier provided range of $2.00 -$2.06). Revenues
are expected to increase at an annualized growth rate of 21%-23%
Going forward, Illumina's prospects seem strong on the back of
strong global demand for its products and an attractive portfolio
along with successful launch of new products like NextSeq 500 and
HiSeq X Ten. With the proposed launch of the pre-implantation
genetic screening product - VeriSeq PGS to be used on the popular
MiSeq platform and a dedicated management team, we believe Illumina
is well positioned to exploit a more than-$20 billion market
opportunity and eventually meet its revised guidance.
The stronger-than-anticipated results triggered an uptrend in
the Zacks Consensus Estimate, as analysts became more constructive
on the stock's future performance. This is evident from the
movement witnessed in the Zacks Consensus Estimate that increased
5.4% to $2.16 for 2014 and 3.9% to $2.64 for 2015 over the past 30
Other Stocks to Consider
Apart from Illumina, other stocks worth considering in the
MedTech industry include
ANI Pharmaceuticals, Inc.
Gilead Sciences Inc.
Myriad Genetics Inc.
), all carrying a similar Zacks Rank #1 (Strong Buy).
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