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Illumina Upgraded to Outperform by SVB Securities

NEW YORK – SVB Securities on Tuesday upgraded its rating for Illumina to Outperform, with a new price target of $270, based on expectations for the new NovaSeq X instrument line.

The new NovaSeq X Plus should be "the instrument of choice as both the clinical and research end-markets pivot from panels and exomes to whole genomes, while the backdrop of minimal residual disease and cancer screening samples only grows," Puneet Souda, senior research analyst at SVB, wrote in a note to investors. "We see [NovaSeq] X Plus catalyzing this transition over the next three to four years and driving a pull thru of $1.5 million to $1.8 million, with strong X Plus installs replacing the existing 1,500 high-volume NovaSeq 6000 and bringing in new customers."

The upgrade comes right after the inaugural Illumina Genomics Forum last week, where the company provided information on XLeap-SBS, a new sequencing-by-synthesis chemistry. Illumina also held an investor day on Monday.

"Though Illumina still lacks a permanent CFO and questions about prior execution are likely to linger with 2023 being a transition year for the new product launch, we see an improving outlook where the precise entry point would be hard to time," Souda noted. "We also see higher likelihood of Grail's divestiture based on management comments from the investor day."

In Tuesday morning trading on the Nasdaq, shares of Illumina rose 9 percent to $204.32.