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UBS Downgrades Illumina to Neutral; Expresses Doubts About Grail Deal

NEW YORK – Investment firm UBS said on Monday that it is downgrading Illumina's stock from a 'buy' to a 'neutral' rating, following Illumina's announcement that it plans to acquire cancer diagnostics firm Grail for $8 billion in cash and stock.

UBS also lowered its price target for Illumina's stock to $285 from $390 per share.

In a note to investors, UBS analyst Dan Brennan wrote that "while the pan-cancer screening opportunity Grail's lead test (Galleri) addresses is significant, the revenue trajectory is uncertain and guidance calls for material [earnings per share] dilution given Grail's operating loss and associated spending ramp."

He noted that Illumina's stock has declined about 23 percent since rumors about the pending deal were reported, adding that "given the material shift in strategy this deal signifies, combined with dilution and limited visibility, we see the risk reward as more balanced and downgrade to Neutral."

JP Morgan also downgraded Illumina's stock on Monday and several other analysts cut their price targets for the company.

In Tuesday morning trading on the Nasdaq, Illumina's stock was down more than 2 percent at $263.59 per share.

The Scan

Call for a Different Tack

Experts weigh the value of recent experiments testing genetically modified pig kidneys using brain-dead individuals, according to Nature News.

Wastewater Warning

The New York Times reports that wastewater surveillance in some parts of the US point to a possible surge.

Can't Get in the Program

Due to the Northern Ireland protocol dispute, the European Union is preventing UK researchers from joining the Horizon Europe research program, the Times of London reports.

Science Paper on Spatial-Controlled Genome Editing

In Science this week: approach to enable a CRISPR-Cas13a-based system to be used as a cancer therapy.