Now that the average stock in the benchmark S&P 500 is trading at about 25 times trailing earnings, it's hard to find great companies people aren't paying a premium to own. Priced at about 53 times trailing earnings, though, shares of Illumina, Inc. (NASDAQ: ILMN) stand head and shoulders above an already expensive crowd.
On the other hand, I could be wrong about low-cost demand going forward; after all, we are in uncharted waters here. If Illumina stock falls to the same P/E ratio as the average stock in the broad market S&P 500 index (about 25 times trailing earnings) in the near term, a purchase at recent prices could result in a 53% loss.
Illumina intends to begin shipping the $985,000 NovaSeq 6000 in March, and the $850,000 NovaSeq 5000 in the middle of the year. One thing is certain: The stock will soar or swoon on news of their uptake. If you don't have an iron stomach, I suggest waiting for a pullback or a clear signal the lower-cost sequencers are indeed a game changer.
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Cory Renauer has no position in any stocks mentioned. You can follow Cory on Twitter @coryrenauer or LinkedIn for more healthcare investing insight.The Motley Fool owns shares of and recommends Illumina. The Motley Fool has a disclosure policy .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.