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Goldman Sachs Resumes Coverage of Illumina

NEW YORK (GenomeWeb News) – Investment bank Goldman Sachs has reinstated coverage of Illumina, giving it a Neutral rating and a 12-month price target on its stock of $48.

The bank suspended coverage of Illumina shortly after Roche launched its hostile bid for the San Diego firm. Goldman Sachs was an advisor to Illumina on the proposed deal, which ended when Roche abandoned its pursuit last month.

In a research note issued late Wednesday, analyst Isaac Ro said that Illumina remains "the leading player in genomics with ample opportunities for incremental product innovation." He added that the "continued democratization of DNA sequencing" coupled with Illumina's razor/razor blade model should drive 10 percent revenue growth, on a compounded annual basis, for the next three years.

In the long term, the firm will need to expand its total addressable market with penetration into adjacent markets such as diagnostics, which Ro said will probably require significant investment and an infusion of expertise in regulatory matters.

He revised revenues estimates for full-year 2012 to $1.16 billion from an earlier forecast of $1.15 billion, and raised his EPS estimate to $1.60 from $1.59.

For full-year 2013, revenues estimates were increased to $1.26 billion from $1.22 billion, while EPS was lowered to $1.77 from $1.84.

In Thursday afternoon trading on the Nasdaq, shares of Illumina were down nearly 2 percent at $45.81.

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