Wedbush Downgrades Illumina (ILMN) to Neutral; Don't Own Just on Buyout Hope

January 4, 2013 8:24 AM EST Send to a Friend
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Price: $191.90 --0%

Rating Summary:
    20 Buy, 8 Hold, 1 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 0
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Wedbush downgraded Illumina (NASDAQ: ILMN) from Outperform to Neutral with a price target of $52, citing diminished risk/reward.

The firm notes shares of ILMN are up 6% in the last month and up 35% in the last six months versus a 6% six-month gain in the BTK and S&P 500 indices and a 4% one-month gain in the S&P 500.

Wedbush said recent checks ok, but not stellar enough to support chasing shares. "We have spoken with several typical sequencing customers recently that are either putting off or second guessing HiSeq purchases because of the attractive price point of ILMN’s own sequencing service. In addition, for the first time, we are hearing about instances of used HiSeq 2000’s for sale on the secondary market at steep discounts. On a positive note, near-term project pipelines appear robust and, despite continued MiSeq teething pains, feedback remains largely positive to date, with plans for greater utilization by core labs in 2013."

The firm also said a near-term takeout unlikely, in their view. "We believe the only driver of meaningful upside from current levels is a takeout, which is very difficult to predict. As a reminder, the late Dec. surge in shares was due to renewed takeout speculation following a Swiss news (L’Agefi) article specifying a merger agreement with Roche for $66/share. We believe Roche is more inclined to wait for another hiccup or for the sequencing-based diagnostics opportunity to more fully develop before making another play for ILMN."

For an analyst ratings summary and ratings history on Illumina click here. For more ratings news on Illumina click here.

Shares of Illumina closed at $55.55 yesterday.


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