Illumina, Inc. (NASDAQ:ILMN) Sold Off After Disappointing Q3 Prelims


Illumina, Inc. (NASDAQ:ILMN) shares tanked, and the biotech sector shuddered Tuesday after the company declared unflattering preliminary sales numbers for its third quarter.

Illumina closed at $138.99, down 24.81% on volume of 12.43 million shares. Other companies in the space also closed in the red, for example, Agilent Tech (-4.19%), Thermo Fisher (-2.65%) and Pacific BioSciences (-7.29%).

The iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB), in which Illumina is a key holding, fell 3.84% to close at $277.

Also weighing on the sector was news Monday that a major investor had sued blood-testing startup Theranos Inc and its founder Elizabeth Holmes for allegedly lying in order to secure its $100 million investment.

Illumina, Inc. (NASDAQ:ILMN) preliminary numbers show sales are off

Illumina sells expensive DNA sequencing machines, and has likely not sold as many as it expected during Q3.

For the third quarter it gave a preliminary estimate of sales of $607 million, which was well short of its revenue guidance of $625 million to $630 million. It also disappointed on Street expectations of $628 million.

“The shortfall in quarterly revenue was driven by a larger than anticipated year-over-year decline in high throughput sequencing instruments,” the company said. “As a result, the company expects fourth quarter revenue will be flat to slightly up sequentially.”

Investors understandably headed for the hills after Illumina’s huge guidance miss and the dull outlook painted by the company for Q4.

Analysts reexamine Illumina, Inc. (NASDAQ:ILMN)

Analysts at Citigroup downgraded Illumina from Buy to Neutral. Canaccord Genuity kept intact their rating of Hold but lowered their price target from $165 to $136. Cantor Fitzgerald too reiterated their Hold, but chopped the price estimate from $165 to $155.

BTIG analyst Dane Leone suggested that growth in the gene sequencing market may be plateauing. “Clearly, a divergence has occurred whereby internal growth forecasts are failing to accurately reflect market demand,” Leone said in a note to clients.

Technically, Illumina has traded over the past year in a range bounded by $130 at the lower end and $185 – $190 on the upper side.

Chances are it will now break the pattern heading down, resuming the downtrend it commenced from the $240 level.


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