Illumina Reports Better-Than-Expected Q4 Earnings; Shares Slip Pre-Market

Shares of Illumina slipped 1.8% in Friday’s pre-market trading despite the gene sequencing company announcing fourth quarter earnings results that beat analysts’ expectations.

Earnings per share in the fourth quarter came in at $1.22 compared to consensus estimates of $1.11, while revenues grew 20% to $953 million beating analysts’ forecasts of $898 million.

Illumina’s (ILMN) revenues for the full year 2020 however decreased 9% year-on-year to $3.2 million, with gross margins of 68% also falling from 69.6% in 2019. Full-year EPS dropped significantly to $4.50 compared to $6.57 a year earlier.

“Illumina delivered a strong finish to 2020 with record fourth quarter revenue exceeding our expectations,” said Illumina CEO Francis deSouza. “Our business delivered strong sequential growth in the second half of 2020 and we expect continued recovery from the pandemic in 2021.” (See Illumina stock analysis on TipRanks)

Looking ahead to fiscal 2021, Illumina expects year-on-year revenue growth of between 17% and 20% with EPS in the range of $5.10 to $5.35. The company will report first quarter results on April 27.

Canaccord Genuity analyst Max Masucci reiterated his Hold rating on the stock today but raised his price target to $410 from $350. This implies downside potential of around 9% from current levels.

Masucci told investors that ILMN is still in its infancy in terms of genomic applications and believes that the GRAIL acquisition could have a medium-term dilutionary effect on the company’s earnings. Nonetheless, Masucci believes ILMN presents a long-term opportunity for investors and recommends holding onto ILMN stock and accumulating more if the share price drops.

Consensus among analysts is a Moderate Buy based on 4 Buys and 4 Holds. The average analyst price target of $377.86 suggests downside potential of about 16% over the next 12 months.

Illumina scores a 9 out of 10 on Tipranks’ Smart Score which suggests that the company is expected to outperform analysts’ expectations moving forward.