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Illumina Banks on Strategic Partnerships, Competition Rife


On Feb 7, we issued an updated research report on Illumina, Inc. ILMN — a Zacks Rank #3 (Hold) stock.

Over the last three months, this San Diego, CA-based company, providing tools and integrated systems for the analysis of genetic variation and function, has gained 4.7%, higher than the broader industry’s 1.4%.

Illumina exited fourth-quarter 2017 on a solid note, beating the Zacks Consensus Estimate on both the fronts. Additionally, revenues and earnings improved on a year-over-year basis. This apart, an improving margin scenario instilled investor confidence in the stock.

We are also optimistic about Illumina’s expansion strategy through the enhancement of its portfolio of sequencing products and the development of strategic partnerships with therapeutic and diagnostic service providers. In this regard, in January 2018, Illumina signed a commercial agreement for distributing Thermo Fisher Scientific’s Ion AmpliSeq technology to researchers who conduct studies on Illumina’s next-generation sequencing platform.

Currently, Illumina is focusing on product innovation through research and development as well, which is evident from the recent launch of iSeq 100 Sequencing System. Post a promising fourth quarter, we expect Illumina to maintain growth momentum on continued uptake of sequencing consumables, instruments and microarray portfolios.

Meanwhile, Illumina faces stiff competition in the sequencing, SNP genotyping, gene expression and molecular diagnostics markets with several large players already enjoying significant market share, intellectual property portfolios and regulatory expertise. Also, the National Institutes of Health (NIH) funding issue raises concern.

Key Picks

Some better-ranked stocks in the broader medical sector are Bio-Rad Laboratories BIO, Becton, Dickinson and Company BDX and PerkinElmer PKI.

Bio-Rad Laboratories has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The company has a long-term expected earnings growth rate of 25%.

Becton, Dickinson and Company has a Zacks Rank #2. The company has a long-term expected earnings growth rate of 12.8%.

PerkinElmer has a long-term expected earnings growth rate of 12.3%. The stock carries a Zacks Rank #2.

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