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Illumina, Inc. (NASDAQ:ILMN) shares lost one quarter of their value today on back of last night’s third-quarter pre-announcement. Though there was just a slight 3% “shortfall” in revenue of $21 million, the gene sequencer additionally guided fourth-quarter revenue under the Street’s estimates of $684 million, falling below at $607 million. Meanwhile, HiSeq instrument placements persist as a “weak” spot for the company, translating to an additional “shortfall” in sequencing instrument revenue.
In reaction, Cantor analyst Bryan Brokmeier reiterates a Hold rating on shares of ILMN while reducing the price target from $165 to $155, which represents a nearly 15% increase from where the stock is currently trading.
Brokmeier had projected revenue of $625.1 million, which ILMN also did not meet. From the company’s perspective, the miss is a reflection of lower-than-anticipated high-throughput systems sales, which includes HiSeq X placements coming up short. EPS was not indicated in the pre-announcement, although Brokmeier now forecasts $0.87, a drop from his previous estimate of $0.92, and under the Street’s estimate of $0.91.
The analyst explains, “The weak HiSeq placements are particularly concerning because the HiSeq is the greatest driver of consumable revenue pull-through and a reacceleration may be necessary for us to become more positive with our view of shares. Hence, we continue to recommend that investors remain on the sidelines.”
“Although we anticipate peers to trade down in sympathy, ILMN’s troubles are largely company-specific and we remain positive on peers, particularly PACB. We believe expectations for PACB are fairly modest and may not be fully reflecting its strong pipeline at the end of 2Q16 or pent-up demand ahead of ramped up production of the highvolume manufacturer. That said, ILMN has the highest multiple in the sector and we believe that any pullback may be a drag on peer valuation,” Brokmeier concludes.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Bryan Brokmeier is ranked #737 out of 4,184 analysts. Brokmeier has a 50% success rate and realizes 5.0% in his annual returns. When recommending ILMN, Brokmeier faces a loss of 19.7% in average profits on the stock.
TipRanks analytics exhibit ILMN as a Hold. Based on 11 analysts polled in the last 3 months, 4 rate a Buy on ILMN, 5 maintain a Hold, while 2 issue a Sell. The 12-month price target stands at $156.44, marking a 15% downside from where the shares last closed.
Leerink Swann analyst Michael Schmidt reiterated an Outperform rating on shares of Exelixis, Inc. (NASDAQ:EXEL), while raising the price target to $16 (from $15), after the cancer drug maker presented full CABOSUN Phase II results in 1L metastatic renal cell carcinoma (mRCC) at ESMO. The price target now reflects a higher probability-of-success of Cabo in 1L RCC.
Schmidt noted, “Overall, the data looks very impressive and was highlighted as a “major scientific breakthrough” and EXEL plans to file an sNDA with the FDA in the near future to obtain a label for front-line treatment of intermediate- and poorrisk mRCC. The stock traded down, however, following comments by the ESMO presentation discussant noting that a Phase III trial may be needed to confirm the overall survival (OS) trend seen in the study.”
“Based on feedback we received previously form several KOLs, we believe the approval probability of the sNDA is high, in particular in the context of already generated positive Phase III results in 2L, with compendia listing expected. Several key questions around the data were addressed by mgmt. in a post-ESMO investor briefing, highlighting the robustness of the results,” the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Michael Schmidt has a yearly average return of 23.1% and a 62% success rate. Schmidt has a 74.7% average return when recommending EXEL, and is ranked #57 out of 4184 analysts.
As of this writing, all the 5 analysts polled by TipRanks rate Exelixis stock a Buy. With a return potential of 45%, the stock’s consensus target price stands at $18.