😎 Summer Sale Exclusive - Up to 50% off AI-powered stock picks by InvestingProCLAIM SALE

Illumina stock target cut amid FY25 EPS forecast, retains Outperform rating

EditorAhmed Abdulazez Abdulkadir
Published 06/11/2024, 08:57 AM
ILMN
-

On Tuesday, Evercore ISI adjusted its financial outlook for Illumina (NASDAQ:ILMN), reducing the price target to $175 from the previous $195, while retaining an Outperform rating on the stock. The firm anticipates a standalone earnings per share (EPS) of over $4.50 for the fiscal year 2025. This projection is based on an estimated 6% organic growth, an improvement of around 200 basis points in operating margins (OMx), and a 24% tax rate, with a share count of approximately 162 million.

The revision stems from a detailed analysis of the company's revenue expectations for the second half of 2024. The current guidance suggests relatively flat revenues, with a 4% decline in the first half organic revenue, followed by an anticipated 4% growth in the second half. However, some skepticism remains due to potential macroeconomic challenges and increased competition from products like Element and Ultima, which could hinder growth in the latter half of the year.

Despite these concerns, Evercore ISI projects a slight contraction of 1% in Illumina's fiscal year 2024 revenue, with an expected rebound in the fourth quarter by approximately 5%. This rebound is anticipated to lay the groundwork for the forecasted 6% organic growth in fiscal year 2025. The analysis takes into account the NovaX system's ability to reduce the price per sample by roughly 60%, although the real-world impact is expected to be less significant. The firm also acknowledges the ongoing discussions regarding the elasticity of demand in response to pricing changes.

Evercore ISI's outlook is cautious, with the expectation that the macro funding environment will continue to be challenging in fiscal year 2025. This forecast is incorporated into the new price target for Illumina, as the firm navigates through the uncertainties of the market and competitive pressures.

In other recent news, Illumina, a prominent player in DNA sequencing technologies, is making significant strides in its business operations. The company recently announced the spin-off of its healthcare company, GRAIL, which focuses on early cancer detection. Set for June 24, this move will see Illumina shareholders receive one share of GRAIL for every six shares of Illumina they own. Post-spinoff, Illumina will retain a 14.5% stake in GRAIL. This development is expected to enhance Illumina's cash generation capabilities and reduce its risk profile, but may also incur incremental charges ranging from $35 million to $50 million.

In the realm of personnel changes, Illumina has appointed Everett Cunningham as its new Chief Commercial Officer (CCO), effective from June 10. Cunningham brings over two decades of commercial leadership experience in healthcare technology, life sciences, and pharmaceuticals. This appointment is expected to bolster Illumina's market dominance in next-generation sequencing and enhance their offerings to meet customer demands.

In the context of analyst notes, both Canaccord Genuity and Jefferies have maintained a Hold rating on Illumina's shares. While the spin-off of GRAIL is seen as a positive step, the valuation of GRAIL remains uncertain.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.