TD Cowen cuts rating on Illumina stock to hold

Investing.com -- TD Cowen downgraded Illumina Inc (NASDAQ: ILMN) to "Hold" following the company's fourth-quarter earnings, citing weaker-than-expected next-generation sequencing (NGS) consumable growth, increasing competition, and geopolitical risks in China. The brokerage has a price target of $140.

While Illumina had already preannounced its fourth-quarter results, TD Cowen highlighted that NGS consumable growth declined 3%, missing its 5% forecast, with weaker NovaSeq pull-through offsetting stronger instrument sales. The firm also noted concerns over the long-term acceleration of the X series, which remains key to the company's revenue growth and valuation.

Beyond operational challenges, TD Cowen flagged potential regulatory hurdles in China after Illumina was placed on the country's Unreliable Entity List, raising risks of sales restrictions or a possible market exit. Additional uncertainty stems from potential funding constraints at the U.S. National Institutes of Health (NIH) and growing competition from existing players and emerging threats, including Roche.

While the firm acknowledged that Illumina's new management has made significant progress in improving margins and long-term revenue growth, it expects a more range-bound stock in the near term given the muted outlook for 2025.

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