ILMN - Embedded Expectations Analysis - 2021 10 14
Illumina, Inc. (ILMN:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 44.0x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may be concerned about the sustainability of margin improvements, shipment levels, and the potential of their Popseq pipeline.Specifically, management may lack confidence in their ability to sustain NextSeqDx record shipments, high NovaSeq order volume, and non-GAAP operating margin improvements. Moreover, they may be overstating the growth and revenue potential of their Popseq pipeline, as well as their ability to gain reimbursement coverage in their clinical business. Management may also lack confidence in their ability to capitalize on noninvasive prenatal testing (NIPT) growth opportunities, sustain Greater China revenue growth, and meet their pull-through ranges for NextSeq and MiSeq. Furthermore, they may have concerns about the cost-effectiveness of whole-genome sequencing for genetic disease, the competitive pressures in the sequencing space, and the impact of one-time transactions on revenue, particularly the NIPT settlement. Finally, management may lack confidence in their ability to gain further traction in their research segments, continue diversifying the business, and maintain their liquidity position.
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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