William Blair Reiterates Outperform On Illumina Following Survey Findings
In a research report issued yesterday, William Blair analyst Amanda Murphy reiterated an Outperform rating on Illumina (ILMN), with a $200 fair value. The call comes following a survey that shows meaningful interest in Illumina’s full suite of products.
The following bullets contain some highlights from the report:
- In conjunction with The Dark Report, a periodic intelligence report on the laboratory testing business, we conducted a survey(n=325 total responses, 290 fully completed responses) focused on the use of next-generation sequencing (NGS) in the lab environment.
- The magnitude of the response was surprising (given our focus on smaller labs) and demonstrates the rapid uptake of next-generation sequencing in the clinical space. Fifty-nine percent of participants (n=246) plan to buy a NGS platform in the future, with 31% planning a purchase in the next 12 months. Of the participants who planned to buy a platform, the majority plan on buying an Illumina machine (the MiSeq, MiSeq DX, and NextSeq all had over 100 planned purchases). Fifty-five percent plan on adding NGS-based tests in the future, including predominantly targeted gene panels, single gene testing, and hotspot somatic alteration panels. Most labs plan to outsource more complex testing (whole human genome and exome sequencing).
- The company is the clear leader in a massive market (with a well-defined $20 billion TAM). Despite investor focus primarily on the higher throughput market, our recent survey illustrates that the company is seeing meaningful demandfor both of its offerings: the higher throughputmachines (HiSeq and X Ten) andpotentially the lessappreciated lower throughput/more commercial- focused platforms. Assuming Illumina is able to secure half of its $20 billion TAM over five years, discounted back (at 15%) and using a 5 times EV/sales multiple implies a fair value of $200.
According to TipRanks.com, which measures analysts and bloggers success rate based on how their calls perform, analyst Amanda Murphy has a 1% average return and a 33% success rate. Murphy is ranked #2400 out of 3207 analysts.