Illumina (ILMN): Mixed Checks Limit Upside, Piper Jaffray Says

Piper Jaffray analyst, William Quirk, performed a series of checks on Illumina (NASDAQ: ILMN) and concluded that significant upside (such as >$10M) does not appear as obvious vs. other periods. However, he sees multiple drivers in 2016 and would be a buyer in the event of a preannouncement. He maintains his Overweight rating and $219 PT.

A recent round of HiSeq X channel checks found 25 placements during the quarter compared to 29 modeled. Of the 25 installs, 15 were placed into private facilities with limited installation visibility (i.e., pharma). We found one customer adding capacity during the quarter, while others received Xs to fulfill/complete their initial order. However, the analyst states that he does not always find all Xs initially, with upside to our checks likely from pharma customers.

They would be buyers on a weaker-than-expected 4Q15 preannouncement with several large population sequencing initiatives starting (or ramping) in 2016, benefiting ILMN's sequencing consumables. Specifically, Genomics England only sequenced 6,000 genomes to-date out of 100,000 by 2017. Additionally, Australia (through Garvan Institute, which has a HiSeq X) may launch its own 100,000 genome project (~$80M in potential ILMN revenue, not including additional instrumentation).

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 $181.28 yesterday.

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