Report
Valens Research

ILMN - Embedded Expectations Analysis - 2021 01 05

Illumina, Inc. (ILMN:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 46.5x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may be concerned about declining margins, the GRAIL acquisition, and NGS technology

Specifically, management may lack confidence in their ability to mitigate margin declines and sustain noninvasive prenatal testing (NIPT) business growth. In addition, they may have concerns about the sustainability of Novaseq and Nextseq demand and the recovery of consumables demand. Moreover, management may lack confidence in their ability to convert HiSeq customers to NovaSeq and grow in China. Furthermore, they may be exaggerating the potential of Next Generation Sequencing (NGS) and the benefits of the GRAIL acquisition. Finally, management may be concerned about the impact of paused cancer screenings, the progress of the All of Us research program, and the Thrive study's results
Underlying
Illumina Inc.

Illumina is engaged in sequencing- and array-based solutions for genetic and genomic analysis. The company provides whole-genome sequencing, genotyping, noninvasive prenatal testing (NIPT), and product support services. Using the company's services, customers can perform whole-genome sequencing projects and microarray projects (including large-scale genotyping studies and whole-genome association studies). The company provides NIPT services through its partner laboratories that direct samples to the company on a test send-out basis in its Clinical Laboratory Improvements Amendments-certified, College of Pathologists-accredited laboratory. The company also provides support services to customers who have purchased its products.

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Valens Research
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