Leerink Partners Resumes Illumina (ILMN) at Market Perform
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Leerink Partners resumes coverage on Illumina (NASDAQ: ILMN) with a Market Perform rating and a price target of $145.00.
Analyst Puneet Souda commented, "Illumina continues to dominate the sequencing market worldwide with 70%-80% market share in sequencer units. However lately, the leading sequencing company has faced a number of forecasting challenges ranging from HiSeq X placements in 3Q16 to its inability to close orders in 1Q16 - leading to 4 revenue shortfalls compared to the Street in last 6 quarters. And while the sequencer boxes continue to miss the number of projected placements, we believe ILMN’s consumables revenue can continue to deliver 20%+ growth on ~$1.5B annual revenue base (2016E), highlighting the shift towards more recurring revenue in absence of ILMN’s traditional new instrument launch cycles. We firmly believe the underlying demand across all markets including whole genomes, NIPT, oncology and panels remains robust, which bodes well for ILMN in the longer run, but the company has to convince us and the Street that its forecasting model is back on track and unpredictable revenue is a thing of the past. As a result, we are inclined to stay on the sidelines until we gain clarity into the company’s forecast."
Shares of Illumina closed at $133.13 yesterday.
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