Tuesday, Piper Sandler reaffirmed its positive stance on Illumina Inc. (NASDAQ:ILMN) shares, maintaining an Overweight rating and a price target of $195.00. The firm's analyst highlighted Illumina's recent update on its fourth-quarter guidance, which was adjusted downward following a third quarter that met expectations. The adjustment was attributed to slightly lower consumables revenue than previously projected.
Illumina also confirmed its goal to increase revenue in the coming year, with aspirations to reach high single-digit growth by 2027. Despite the current macroeconomic challenges, the analyst believes that comparable year-over-year results and an anticipated new instrument cycle beginning in 2025 will support the company's top-line performance.
Moreover, Illumina has revised its operating margin targets upward for the current year. The analyst noted the presence of "so much low-hanging fruit" as a reason to anticipate that the company could realize a high-teens earnings growth in the following year. The positive outlook is supported by the company's strategic targets and expected improvements in financial performance.
In summary, Piper Sandler's analyst reiterated confidence in Illumina's potential for revenue growth and margin improvement. The firm's price target of $195.00 reflects this optimism about the company's prospects for the future, including the anticipated positive impact of an upcoming instrument cycle and the company's ability to capitalize on available opportunities to enhance earnings.
In other recent news, Illumina Inc. experienced a slight dip in revenue, reporting $1.1 billion for its third quarter, a 2% decrease year-over-year. Despite this, the company has raised its guidance for both operating margin and earnings per share.
Illumina's robust sales of consumables and exceeding market expectations in gross margins and operating profit margins have led to Barclays (LON:BARC) and Citi raising their price targets for the company. Barclays increased their target to $145, maintaining an Equalweight rating, while Citi raised their target to $190, maintaining a Buy rating.
These adjustments reflect a positive outlook on Illumina's growth, particularly in high-throughput sequencing consumables, and strong operational performance. Illumina's transition from the NovaSeq 6000 to the newer NovaSeq X model is progressing well, contributing to an increase in high-throughput consumables revenue. These recent developments underscore Illumina's focus on operational excellence and innovation.
In addition to these updates, Illumina acquired Fluent (NASDAQ:FLNT) BioSciences and repurchased shares, indicating a strong financial position and strategic growth initiatives. The company expects full-year 2023 revenue to decline by approximately 3%, but has raised its non-GAAP operating margin and diluted EPS guidance for 2024.
InvestingPro Insights
Recent data from InvestingPro adds depth to Piper Sandler's analysis of Illumina Inc. (NASDAQ:ILMN). Despite the company's revenue growth challenges, with a slight decline of 1.68% in the last twelve months, Illumina's gross profit margin remains robust at 67.68%. This suggests that the company maintains strong pricing power and operational efficiency, which could support its ambitious growth targets.
InvestingPro Tips highlight that Illumina operates with a moderate level of debt, potentially providing financial flexibility as it navigates current market challenges and prepares for the anticipated new instrument cycle in 2025. Moreover, the company has shown a strong return over the last three months, with a price total return of 32.93%, aligning with the analyst's positive outlook.
Interestingly, while Illumina was not profitable over the last twelve months, InvestingPro Tips indicate that analysts predict the company will be profitable this year. This projection supports Piper Sandler's expectation of high-teens earnings growth in the coming year.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Illumina, providing a deeper understanding of the company's financial health and market position.
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