Leerink Swann Maintains an 'Outperform' on Illumina (ILMN); Near-Term Negative, Long-Term Catalyst Rich

November 23, 2009 7:02 AM EST

Leerink Swann maintains an Outperform rating on Illumina, Inc. (Nasdaq: ILMN), lowers valuation range to $28-30.

Leerink analyst says, "While we believe near-term sentiment remains negative, we continue to believe 2010 will be a catalyst-rich year that sees improved execution...We are lowering our FY10E EPS by $0.15 based on higher R&D and SG&A spending assumptions. Ongoing debate over the future of GWAS has offered a reminder to us that rapid product cycles in genomics requires continued investment in new products. Our long-term (FY10 – FY13) forecasts now assume: (1) 10% revenue growth, (2) modest GM upside via mix shift to consumables, and (3) R&D spend at 20% of sales."

"Our conversations with numerous investors last week underscored the ongoing crisis of confidence in near-term business trends. We spoke with management on Friday and came away with the impression that: (1) the recent Broad Institute order was likely booked in 4Q but does not imply upside versus guidance, as we had previously assumed; and (2) array revenues should grow in FY10 as higher densities / novel content help to renew demand and protect pricing...2010 should be a catalyst-rich year."

To see all the upgrades/downgrades on shares of ILMN, visit our Analyst Ratings page.

Illumina, Inc. engages in the development, manufacture, and marketing of integrated systems for the analysis of genetic variation and biological function.

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