On Wednesday, TD Cowen adjusted its outlook on Illumina, a company traded on NASDAQ under the ticker ILMN, by increasing the price target to $126 from the previous $122, while maintaining a Hold rating on the stock. The firm's decision comes in the wake of Illumina's mixed second-quarter results, which surpassed sales expectations by 2% and delivered solid margins, leading to an earnings per share (EPS) beat.
Despite the positive outcome in sales and EPS, Illumina's guidance for 2024 was revised downwards, influenced by a challenging macroeconomic environment, including capital expenditure concerns and issues in the China market. TD Cowen sees the company's guidance, especially regarding margins, as conservative, noting that Illumina has identified $200 million in new cost reductions that could present a long-term margin opportunity.
The firm acknowledges some positive momentum for Illumina, particularly in margins, EPS, and next-generation sequencing (NGS) consumables, which could create a slight positive bias. However, TD Cowen has chosen to maintain its Hold rating on the stock at this time.
Additional insights and details are anticipated to be shared at Illumina's upcoming Investor Day, scheduled for next Tuesday. This event is expected to provide further clarity on the company's strategic initiatives and financial outlook.
In other recent news, Illumina Inc (NASDAQ:ILMN). has completed the acquisition of Fluent (NASDAQ:FLNT) BioSciences, a move projected to enhance its multiomics capabilities and single-cell analysis technology. The integration of Fluent's PIPseq V technology into Illumina's offerings is expected to make single-cell analysis more accessible. Piper Sandler has maintained a positive outlook on Illumina, reiterating an Overweight rating with expectations of mid-to-high single-digit revenue growth and earnings per share (EPS) above $4.
In relation to another company, TD Cowen reiterated a Hold rating on 10X Genomics, maintaining a $32.00 price target. The company's stock has experienced significant pressure due to concerns about its growth trajectory. However, the introduction of the GEM-X single-cell product is anticipated to catalyze stronger growth.
Illumina has also announced plans to spin off GRAIL, a healthcare company focused on early cancer detection. Following the spin-off, GRAIL is set to debut independently on the Nasdaq stock exchange, focusing its growth strategy on its flagship cancer-detection test, Galleri. Evercore ISI projects a standalone EPS of over $4.50 for Illumina for the fiscal year 2025.
Finally, Baird reduced Illumina's price target to $119 due to the planned divestment of GRAIL. Despite this, Baird maintains a neutral rating on the company's stock. These are the recent developments in these companies.
InvestingPro Insights
As Illumina navigates through a challenging economic landscape, the latest data from InvestingPro shows some key financial metrics that could inform investor decisions. With a gross profit margin of 66.4% over the last twelve months as of Q2 2024, Illumina displays a strong ability to retain revenue after the cost of goods sold. This is a positive sign for investors looking for companies with effective cost management and profitability potential. Despite a slight revenue decline of 0.72% during the same period, the company's EBITDA growth impressively surged by 115.81%, indicating robust operational profitability.
InvestingPro Tips suggest that Illumina is expected to see net income growth this year, with analysts showing confidence by revising their earnings estimates upwards for the upcoming period. While the company has operated with a moderate level of debt and has not been profitable over the last twelve months, analysts predict Illumina will turn a profit this year. Notably, the company does not currently pay a dividend, focusing financial resources on growth and operational improvements.
For investors seeking comprehensive analysis, InvestingPro offers additional insights. There are more InvestingPro Tips available, providing a deeper dive into Illumina's financial health and market position. Visit https://www.investing.com/pro/ILMN for a full suite of data and professional investment tips.
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