Illumina: Reasons To Be Bullish by Michael A. Gayed

in hive-167922 •  5 years ago 

Summary

  • Illumina reported $953 million in revenue for Q4 2019, a 10% increase over $867 million in revenue clocked in Q4 2018.
  • Though the stock is very expensive at $290 (as of Jan 31, 2020) and has been rated as bearish by many analysts, it still looks like an attractive stock.
  • I've rated it as a buy because Illumina is a leader that has captured 70% of market share and is operating in a market that has started booming.
  • I do much more than just articles at The Lead-Lag Report: Members get access to model portfolios, regular updates, a chat room, and more. Get started today »

Eventually, we'll be able to sequence the human genome and replicate how nature did intelligence in a carbon-based system. - Bill Gates

Illumina (ILMN) had taken a whack immediately after its Q4 2019 results and the general market volatility that followed. Despite that, I am bullish on the stock for the long term and consider it as a buy in a SIP (Systematic Investment Plan).

Image Source: Seeking Alpha

There are valid reasons for my bullishness, and here's my analysis.

Illumina and the Future of the Genome-Sequencing Industry

The Next-Generation Sequencing (NGS) market is expected to grow at a CAGR of 20.9% because of declining costs, improving reimbursements, and advancements in technology.

Image Source: Markets & Markets

Markets and Markets, which provides quantified B2B research, opines that ILMN is the leader in the next-generation sequencing market. The company's platform operates on SBS (Sequencing by Synthesis) technology, which has the largest share of the market.

Morning Star's analysts believe that ILMN operates within a strong economic moat, has captured 70% of the sequencing market share, and has enabled scientists to generate over 90% of the world's sequencing data since 2007.

It is also common knowledge that genomic sequencing is swiftly transitioning into clinical practice, and that genome medicine programs are being called the drivers of transformational change. Costs too are reducing and the future of this business is extremely bright.

Markets and Prospects

ILMN's revenue in the Americas grew 5% in Q4 2019 over Q4 2018. Europe, China, and APJ delivered 19%, 21%, and 4% growth, respectively, for the same period.

There's a special mention to be made about the UK market. By the middle of 2020, genome testing will become a standard of care for more than 20 genetic diseases and four different types of cancers in the UK. Matt Hancock, Secretary of State for Health and Social Care in the UK, is urging the NHS to be more ambitious with the use of technology. This is great news for the company's prospects.

On revenue - it is important to note that of the $953 million revenue for Q4 2019, $812 million pertained to product sales. Of the total product revenue, consumables revenue was $572 million - which is 70.44% of the total sales. An increase in the sale of sequencing equipment will make the demand for consumables rise exponentially.

...Read the Full Article On Michael A. Gayed's Blog on Seeking Alpha

Author Bio:

leadlagreport bio.png

This article was written by Michael A. Gayed. An author on Seeking Alpha and founder of the Lead Lag Report.

Steem Account: @leadlagreport
Twitter Account: leadlagreport

Learn more about Michael A. Gayed on Seeking Alpha

Steem Account Status: Unclaimed

Are you Michael A. Gayed (a.k.a. leadlagreport)? If so, you have a Steem account that is unclaimed with pending cryptocurrency rewards sitting in it from your content. Your account was reserved by the Steemleo team and is receiving the rewards of all posts syndicated from your content on other sites.

If you want to claim this account and the rewards that it has been collecting, please contact the Steemleo team via twitter or discord to claim the account. You can also view the rewards currently sitting in the account by visiting the wallet page for this account.

What is Steemleo Content Syndication?

The Steemleo community is syndicating high-quality financial content from across the internet. We're also creating free Steem accounts for the authors of that content who have not yet discovered the Steem blockchain as a means to monetizing their content and we're listing those accounts as the 100% beneficiaries to all the rewards. If you want to learn more about Steemleo's content syndication strategy, click here.

Posted via Steemleo

Authors get paid when people like you upvote their post.
If you enjoyed what you read here, create your account today and start earning FREE STEEM!
Sort Order:  

cool info...

Posted via Steemleo

i agree...

Posted via Steemleo

Congratulations @leo.syndication! You have completed the following achievement on the Steem blockchain and have been rewarded with new badge(s) :

You received more than 30000 upvotes. Your next target is to reach 35000 upvotes.

You can view your badges on your Steem Board and compare to others on the Steem Ranking
If you no longer want to receive notifications, reply to this comment with the word STOP

Do not miss the last post from @steemitboard:

SteemitBoard Ranking update - A better rich list comparator
Vote for @Steemitboard as a witness to get one more award and increased upvotes!