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Analyst Raises Valuations on Illumina, Life Technologies

NEW YORK (GenomeWeb News) – Investment bank Leerink Swann has raised its valuations on the stocks of Illumina and Life Technologies, citing the benefit of upcoming stimulus funding and expected gains in the next-generation sequencing market.

Analyst Isaac Ro upped his valuation on Illumina's stock to $48-$55 from his previous range of $37-$41. While he slightly lowered his revenue estimate for fiscal-year 2009 to $718.2 million from $718.6 million, he raised his estimate for FY 2010 to $920 million from $896.2 million.

Ro noted that Illumina holds a commanding market share among the next-generation sequencing firms selling systems to the top 15 global genome centers. He also said that the upcoming launch of Illumina's new Harmonia platform, which will combine with the firm's iScan array system to provide lower-throughput sequencing capabilities, will help drive sales.

"Along with stimulus funding, we think Harmonia could help expand the NGS market towards 2,000 systems globally, up from our estimate of 900 currently," wrote Ro in a research note.

Ro also upped his valuation on Life Technologies' stock to a range of $45-$48 from a previous range of $40-$42. He said that the decision to raise the valuation was based on "continued optimism around pending stimulus dollars … continued technical improvements and applications for SOliD, and solid execution since the ABI merger."

Ro said that Illumina's Harmonia platform "will pose a threat to SOLiD among smaller institutions given lower upfront cost and functionality with array platforms. Going forward, we do believe SOLiD can gain traction in replacing existing gene expression array technologies."

Leerink Swann has "outperform" ratings on both firm's stocks.

In Monday mid-afternoon trade, shares of Illumina were up around 2 percent at 38.78, while shares of Life Technologies were down less than 1 percent at $41.82, both on the Nasadq.

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