Illumina falls short of expectations, shares drop 23%

August 12, 2022

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The shares of Illumina($NASDAQ:ILMN) fell ~23% in the post-market Thursday after the gene sequencing company fell short of expectations with its Q2 2022 financials which the management blamed for macro challenges. “Our second quarter results did not meet our expectations as challenges in a complex macroeconomic environment more than offset the growth we continue to see in sequencing runs on our platforms,” Chief Executive Francis deSouza remarked ahead of the earnings call at 5 p.m EST. Revenue for the quarter rose ~3% YoY on a reported basis to $1.16B indicating ~5% decline from the preceding quarter even as product revenue rose ~4% YoY to $1.0B Meanwhile, the net company swung to a net loss of $535M compared to the $185M of net income in Q2 2021 after accounting for $609M in legal contingencies. This disappointing result is likely to have a negative effect on Illumina’s market share and earnings in the long term.

Market Reaction

This caused Illumina’s stock to drop by 23% on Thursday. Despite the disappointing guidance, Illumina’s stock recovered slightly on Thursday, opening at $229.6 and closing at $227.4. This was up by 0.1% from its prior closing price of $227.3. It remains to be seen how the stock will perform in the coming days and weeks, but investors will be closely watching Illumina’s progress.

VI Analysis

As a company’s fundamentals reflect its long-term potential, the analysis of ILLUMINA is made simple by VI app. According to VI Risk Rating, ILLUMINA is a medium risk investment in terms of financial and business aspects.

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The stock price was up 0.1% the following day. The company reported that it had mixed results in the third quarter. This could be due to the fact that the company is still growing revenue at a healthy clip. Additionally, the sale of the Cytogenetics business will help Illumina focus on its core business and should be accretive to earnings. Investors may want to consider buying Illumina shares on the dip. The company is still growing revenue at a healthy rate and is selling off a non-core business for a nice profit.

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