Illumina (NASDAQ:ILMN) shares fell over 6% in pre-market trading after the company slashed its full-year forecast.
The company’s adjusted earnings per share came in at 32 cents, easily surpassing both the estimate of 2 cents. In terms of revenue for the second quarter, Illumina generated $1.18 billion, which represents a modest 1.2% year-over-year increase, topping the $1.16B expectations.
The company’s adjusted gross margin stood at 66.5%, which is lower than the 69.4% reported in the same period last year. However, it exceeded the estimated gross margin of 64.8%.
"Illumina's second quarter consolidated revenue grew 8% sequentially from the first quarter, and we saw higher-than-anticipated NovaSeq X shipments," said Charles Dadswell, interim chief executive officer.
"Despite additional placements, we expect our second half revenue to be negatively impacted by customers remaining more cautious in their purchasing, a more protracted recovery in China, and a larger-than-expected temporary decline in high throughput consumables as customers transition to the NovaSeq X. In response, we are increasing customer support for the NovaSeq X and continue to manage our expense base in a disciplined way."
As a result, the company slashed its full-year profit forecast to $0.75-0.90, missing the $1.33 analyst target.
Stifel analysts cut the price target by $40 to $225 per share.
"2Q results beat the Street, as NovaSeq X placements remain strong, but '23 consumables expectations have been reduced as customers experience instrument transition issues and elongated sales cycles, while China softens further," they said.
Citi analysts also lowered the price target on the Sell-rated ILMN stock, going to $150 from the prior $180 per share.
"The company continued to face headwinds stemming from broad-based biopharma weakness, a sharper decline in NovaSeq 6000 consumables revenue than anticipated, and pricing pressures in China due to geopolitical pressures and increased competitive activity," the analysts said.