NEW YORK – TD Cowen on Thursday downgraded shares of Illumina to a rating of Market Perform.
"Illumina's stock has historically experienced higher high [and] lower lows with each successive high-throughput instrument launch, as demand elasticity has led to double-digit next-generation sequencing consumables growth aided by a bolus of instrument revenues — though this time the [NovaSeq] X cycle has not yet ushered this in," analyst Dan Brennan wrote in a note to investors.
The consensus Wall Street estimate for 2024 revenues suggests no growth, he noted, though better margins could help sales rebound in 2025. Brennan attributed disappointing 2023 results to a variety of factors including customer spending constraints, weak sales in China, a delayed flow cell launch, competition, and the disruption of an activist investor campaign that precipitated a change in CEO.
On the positive side, shares are up about 40 percent from recent lows in November, when they fell below $100.
Areas of potential upside include margin expansion under new CEO Jacob Thaysen, greater NovaSeq X demand, and potential success for Grail with its UK NHS trial, which could create value for Illumina as it proceeds to divest the liquid biopsy business.
In Thursday morning trading on the Nasdaq, shares of Illumina were flat at $129.79.