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Illumina (ILMN) Set to Enter the Coveted S&P 500, Stock Up

San Diego, CA-based Illumina Inc.ILMN , a popular life sciences company working for the analysis of genetic variation and function, recently declared that it has been selected by S&P Dow Jones Indices to join the prestigious Standard & Poor's (S&P) 500 Index.

The company will be joining the much sought-after index after the close of trading on Nov 18, 2015, expectedly replacing specialty chemical company, Sigma-Aldrich as the latter is currently in process to be acquired by Merck KGaA (acquisition expected to close on the same day).

Consequent to the news release yesterday, Illumina's shares jumped 4.1% and eventually hit $161.78 in afterhours trading. Currently, this company owns a market cap of approximately $22.75 billion. Average volume of shares traded over the past one day is roughly 1.1 million.

The market sentiment is essentially positive for Illumina expressing investors' enthusiasm regarding the company's addition to the S&P 500, which lists 500 leading companies trading on the NYSE or Nasdaq and captures approximately 80% coverage of available market capitalization in the U.S.

In the last reported third quarter of 2015, Illumina delivered a positive earnings surprise of 1.27%. Notably, in all of the past four quarters, the company's earnings have outpaced the Zacks Consensus Estimate with an average beat of 10.44%.

We are particularly encouraged by several recent developments at Illumina, which indicate strong future potential of the stock. Illumina is in the final stages of the European regulatory process for the next-generation VeriSeq NIPT solution and expects to receive CE Mark for the same shortly. The company is already witnessing strong demand for this test as is evident from the 20% growth observed in NIPT service revenues (including test fees) during the third quarter. Moreover, Illumina recently signed a supply agreement with counsel that includes access to the company's NIPT patent pool. The agreement will enable 36 of Illumina's global customers to enjoy rights to the company's exclusive NIPT solution. This indicates the growing popularity of this lower cost assay that is expected to expand the adoption of prenatal testing in the global market.

Further, the company is also progressing well with its market development activities in reproductive health. As an evidence, sales of Illumina's pre-implantation genetic screening (PGS) products increased more than 25% in the last reported quarter. Currently, the company is in the late stages of enrolling patients in the STAR trial, which will measure the impact of PGS and morphology on IVF success rates. Illumina expects to complete enrollmentin this study in early 2016 and offer an analysis of the interim results in the middle of the year.

Moreover, to further penetrate the burgeoning oncology market, the company recently launched the RUO (Research Use Only) version of its RO1 oncology panel - TruSight Tumor 15. This panel is expected to drive the NGS adoption for tumor analysis in translational research. Currently, Illumina is also on track with the RUO version of the R2 onco panel, which it expects to deliver in mid-2016.

Furthermore, we are optimistic about Illumina's expansion strategy through the enhancement of its portfolio of sequencing products, and the development of strategic partnerships with therapeutics and diagnostic services providers. In Sep 2015, Illumina collaborated with Amoy Diagnostics to accelerate the adoption of precision medicine and targeted therapies in China. This tie-up reflects Illumina's attempt to expand its footprint in the rapidly emerging market of China, in line with its earlier June 2015 collaboration with Chinese genomic enterprise - Annoroad.

Presently, Illumina bears a Zacks Rank #4 (Sell) which, we hope, will take an upward turn following the aforementioned news. Meanwhile, some med-dental/supply stocks worth considering are Heska Corporation HSKA , Actelion Ltd. ALIOF and Anika Therapeutics Inc. ANIK . All the three stocks hold a Zacks Rank #1 (Strong Buy).

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ILLUMINA INC (ILMN): Free Stock Analysis Report

ACTELION LTD (ALIOF): Free Stock Analysis Report

ANIKA THERAPEUT (ANIK): Free Stock Analysis Report

HESKA CORP (HSKA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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