Illumina: Rich Valuation Amid Mounting Competitive and Execution Risks Supports Sell Rating

In a report released yesterday, Michael Ryskin from Bank of America Securities maintained a Sell rating on Illumina, with a price target of $80.00.

Michael Ryskin has given his Sell rating due to a combination of factors tied to Illumina’s fundamental outlook and valuation. While the company’s fourth-quarter revenue and earnings slightly exceeded expectations, the upside appears driven by a few specific areas such as better-than-expected China performance and stronger clinical consumables, rather than a broad-based, sustainable acceleration. He notes that Illumina reiterated its long-term plan for mid- to high-single-digit revenue growth and margin expansion, but offered limited incremental visibility on 2026, particularly with academic and government markets expected to remain soft. The current share price, in his view, already embeds a very optimistic scenario that is difficult to justify given these constraints.

Michael Ryskin’s rating is based on concerns that competitive pressures are being underappreciated by the market and downplayed by management. He highlights the growing threat from both emerging competitors, like Roche, and established players such as Element, which is advancing a high-throughput, lower-cost genome sequencing offering that could pressure Illumina’s pricing and share over time. Additionally, trends in mid-tier instruments like NextSeq placements and pull-through are weakening, pointing to softness in parts of the portfolio that are important for long-term growth. Taken together, these competitive and execution risks, against a backdrop of a rich valuation, support his decision to maintain an Underperform (Sell) rating with a materially lower price objective versus the current trading level.

Ryskin covers the Healthcare sector, focusing on stocks such as Charles River Labs, Illumina, and Waters. According to TipRanks, Ryskin has an average return of 4.4% and a 56.20% success rate on recommended stocks.

In another report released on January 2, Citi also maintained a Sell rating on the stock with a $40.50 price target.