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Morningstar Gives Illumina a BB+ Credit Rating

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Investment research firm Morningstar has initiated a credit rating for Illumina of BB+, which it said reflects its negative view of the genetic analysis instrument business.

Morningstar said that although Illumina's financial position "looks solid," its rating "recognizes the fundamental advantages of competing in this industry." It also used Affymetrix's "recent downfall" in market position as a cautionary note for Illumina's creditors.

"While Illumina currently is dominating its target niches, particularly in sequencing, we believe it is very difficult to sustain competitive advantages in this market for the long run," said Morningstar. "Users of genetic analysis tools gravitate toward the best throughput … and easiest to use options. If new entrants or existing competitors eventually surpass Illumina in those characteristics, demand for Illumina's tools could decline or profit-damaging pricing pressure could ensue in this business."

It also said that Illumina's currently solid financial position — which includes an estimated $748 million in cash and short-term investments versus $390 million in outstanding principal on its convertible debt issue maturing in February 2014 — could take a hit if the firm is forced to spend big on an acquisition.

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